Impact of Success on Creativity and Resource Management:

Three Essays on Bollywood

by Prashant Pushker Shukla

M.S., Arizona State University, 2007 B.A., Sewanee: University of the South, 2006

Dissertation Submitted in Partial Fulfillment of the

Requirements for the Degree of

Doctor of Philosophy

in the

Segal Graduate School

Beedie School of Business

Prashant Pushker Shukla 2015

SIMON FRASER UNIVERSITY Summer 2015

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Approval

Name: Prashant Pushker Shukla Degree: Doctor of Philosophy Title: Impact of Success on Creativity and Resource

Management: Three Essays from Bollywood

Examining Committee: Chair: Elicia Maine Associate Professor

Andrew von Nordenflycht Senior Supervisor Associate Professor

Ajay Agrawal Supervisor Professor Rotman School of Management University of Toronto

Mitch Hoffman Supervisor Assistant Professor Rotman School of Management University of Toronto

Tom Lawrence Supervisor Professor Said Business School University of Oxford

Pek-Hooi Soh Internal Examiner Associate Professor

Michelle Rogan External Examiner Associate Professor INSEAD

Date Defended: June 23, 2015

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Abstract

Two prevailing reasons make studying creative industries valuable to strategy scholars: these

industries are economically significant, and they offer theoretical insights into competition and strategy

beyond the boundaries of the creative industries themselves. This dissertation develops a better

understanding of creative industries and utilizes this setting to inform strategy research on creativity

and resource management, outlines the implications for policy and practice, and earmarks areas that

merit future work.

The first chapter provides an overview, then the second chapter lays the foundation for the investigation

by introducing the setting—the Hindi Film Industry, Bollywood. It qualitatively and quantitatively

highlights both the unique and generic features of Bollywood. In particular, it introduces the unique

attributes of Bollywood that facilitate empirical investigations into creativity: the art form and its

measurement of success. It then elaborates upon traits Bollywood shares with other creative

industries, namely, the resource-intensive and network-based production.

The third chapter addresses the question: Does success diminish creativity? This remains one of the

greatest puzzles in the study of creativity because there are powerful arguments on both sides of the

question. Using novel measures of creativity and success, I identify the causal impact of success on

subsequent levels of creativity. I find that creativity decreases after success. My results show that

above all else, success enhances popularity and enables more popularity seeking. Consequently,

creativity decreases disproportionately more for those who trade off creativity to popularity.

The fourth chapter addresses the question: How do managers transform resources to create value?

This study advances our understanding of resource-based theory by empirically testing the factors that

drive a manager’s ability to acquire and leverage resources. I show that managers with connections to

film families/dynasties in Bollywood exhibit resource enrichment following a successful project. Also,

while film family managers leverage the available resources in order to focus on quality, high-

performing managers not related to film families are focused on the product’s mass appeal.

Keywords: success and creativity, resource based theory, resource management, Bollywood,

creative industries, difference-in-differences

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Dedication

To my Gurus

At Budhanilkantha School and Sewanee

At Arizona State, Simon Fraser, and Toronto

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Acknowledgements

Yamini. Thank you for your uncompromising standards and inspirational attitude.

With you, I became a better researcher, academic, and man. Certainly, getting married

was the best thing I did during my PhD. With you by my side, I have overshot every short

term goal I had for myself, and there is every reason to believe the trend will persist. Thank

you for being the rock, the fun, the humor, and the confidence in my life.

Daddy, Mummy, and Timo. Thanks to my parents and sister for bearing with the

trials of a doctorate degree along with me. Thanks you daddy and mummy for inspiring

me to be resilient and humble, always; and to follow the path of action without expectation

prescribed in the Bhagavad Gita. And Timo, for always being there in times of need for

humor and for counsel.

The Ranjans. My in-laws, for being entertaining fellow passengers and guide in

this journey. Mom for her incredible warmth and simple mantras of life. Dad for his

insightful suggestions and astrological insights. As an ex-IIT faculty, your suggestions

from the other vantage point were simply invaluable. And finally, Kislay, for never shutting

up and making me realize the value of brevity in research.

Andrew von Nordenflycht. For your support and inspiration—it enabled, and still

continues to enable, me to get better and better in the quest for answers to my questions.

Ajay Agrawal. For believing in me, and for showing me how it’s done.

Mitch Hoffman. Thank you, Mitch for the training in metrics—you made it cool and

fun. Identification strategy, is like, my most used phrase now.

Beedie Faculty. For providing a world class training in management theory and

writing. I am grateful to the training I received under the Beedie faculty, particularly Eric

Gedajlovic and Tom Lawrence, during the first half of my PhD. That laid the foundation for

all of my academic writing and theorizing.

Joanne Kim. A special and heartfelt thanks to Joanne, for being on top of things

when I was slacking—particularly in terms of getting credit, and eventually the degree,

and money. If it weren’t for you, not sure what percentage of Beedie PhDs would graduate.

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Rotman Faculty. Thank you also to Rotman faculty Kevin Bryan, Laura Doering,

and Nicola Lacetera, who generously gave me their time and helped shape my writing as

well as identification strategy during the dissertation.

Fellow travellers at Beedie and Rotman. Many thanks also to my fellow travellers

at Beedie and Rotman. In particular, thanks a ton to Bryan Gallagher for being a trail blazer

and helping those behind him and to Kristjan Sigurdson for an exceptional camaraderie.

Utsav KC. For countless hours of conversations about everything within the realm

and for providing a window into the world of real scientists (rocket scientists to be precise).

In the end, one of us did do something about our passion for Bollywood. Your turn.

John Prpić and the Prpić Family. Last but not the least, thank you John for being

an inspiration in my academic work and life, for your tireless inquisition, which even put

mine to test at times; but more importantly, for a friendship, a brotherhood, that lasts a

lifetime. Many thanks also to the Prpić clan—mom, Kathy, Tvtko, and Papa Prpić (present

in spirit)—for adopting a second PhD member in the family and making Canada

memorable for Yamini and I.

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Table of Contents

Approval .............................................................................................................................ii Abstract ............................................................................................................................. iii Dedication .........................................................................................................................iv Acknowledgements ........................................................................................................... v Table of Contents ............................................................................................................. vii List of Tables .....................................................................................................................ix List of Figures.................................................................................................................... x Preface ..............................................................................................................................xi

Chapter 1. The Promise of Creative Industries for Strategy Research: An Introduction ............................................................................................... 1

1.1. Creative Industries – Research Need and Potential ................................................ 1 1.2. Data and Identification Strategy ............................................................................... 5 1.3. Contributions and Directions for Future Research ................................................... 7 1.4. Figures ................................................................................................................... 11

Chapter 2. The Setting: Bollywood .......................................................................... 12 2.1. Compare and Contrast: Hollywood and Bollywood ................................................ 12 2.2. History and Background ......................................................................................... 15 2.3. Features of Bollywood: Relationships, Jubilee, & Masala ...................................... 16 2.4. The Production Process ......................................................................................... 20 2.5. Conclusion ............................................................................................................. 21 2.6. Tables and Figures................................................................................................. 23

Chapter 3. Success and Creativity ........................................................................... 27 3.1. Introduction ............................................................................................................ 27 3.2. Theory and Hypotheses: Exploring Success and Creativity ................................... 31

3.2.1. Impact of Success on Creativity ................................................................ 31 3.2.2. Possible Mechanisms: Financial & Creative Resources,

Subsequent Performance, and Popularity ................................................ 33 3.3. Data and Empirical Framework .............................................................................. 36

3.3.1. Data Collection .......................................................................................... 36 3.3.2. Variables of Interest .................................................................................. 37 3.3.3. Identification Strategy ............................................................................... 40 3.3.4. Threats to Identification ............................................................................. 41

3.4. Results ................................................................................................................... 42 3.4.1. Preliminary Evidence for the Intuition ....................................................... 42 3.4.2. Commercial Success Diminishes Creativity .............................................. 43 3.4.3. Commercial Success Diminishes Creativity More in Top Non

Family Directors ........................................................................................ 43 3.4.4. Mechanism I: Impact of Success on Financial Resources ........................ 44 3.4.5. Mechanism II: Impact of Success of Access to Human Capital

(Stars) ....................................................................................................... 44

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3.4.6. Mechanism III: Impact of Success on Subsequent Performance.............. 45 3.4.7. Mechanism III: Impact of Success on Popularity ...................................... 45

3.5. Discussion .............................................................................................................. 46 3.5.1. Contributions ............................................................................................. 46 3.5.2. A Layperson’s Explanation ....................................................................... 48 3.5.3. Future Research ....................................................................................... 50

3.6. Conclusion ............................................................................................................. 51 3.7. Tables and Figures................................................................................................. 53

Chapter 4. Structuring, Bundling—but Leveraging? Impact of Performance on Resource Management .............................................. 68

4.1. Introduction ............................................................................................................ 68 4.2. Theory and Hypotheses: Resource Management .................................................. 71

4.2.1. Resource Structuring ................................................................................ 72 4.2.2. Resource Bundling .................................................................................... 73 4.2.3. Resource Leveraging ................................................................................ 74

4.3. Setting, Data, and Empirical Framework ................................................................ 76 4.3.1. Data Collection .......................................................................................... 76 4.3.2. Variables of Interest .................................................................................. 76 4.3.3. Identification Strategy ............................................................................... 77

4.4. Results ................................................................................................................... 78 4.4.1. Resource Structuring ................................................................................ 78 4.4.2. Resource Bundling .................................................................................... 78 4.4.3. Resource Leveraging ................................................................................ 79 4.4.4. Resource Leveraging: Results from Triple DD Estimations ...................... 79

4.5. Discussion .............................................................................................................. 80 4.5.1. Contributions ............................................................................................. 80 4.5.2. Future Research ....................................................................................... 83

4.6. Conclusion ............................................................................................................. 84 4.7. Tables and Figures................................................................................................. 85

References 96

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List of Tables

Table 1. Film and Non Film Family Directors: Resources and Success ................ 26

Table 2. Correlations between key variables ......................................................... 26

Table 3. Key Variables .......................................................................................... 53

Table 4. Eyeball Evidence: Creativity after Commercial Success ......................... 54

Table 5. Summary Statistics .................................................................................. 56

Table 6. Percentiles of Directors and Lead Actors ................................................ 57

Table 7. Main Results: Golden Jubilee .................................................................. 58

Table 8. Main Results: Golden Jubilee and Top Non-Family Directors ................. 59

Table 9. Mechanism: Comparisons of Other Pre-Post Jubilee Figures ................. 61

Table 10. Mechanism – Budget ............................................................................... 62

Table 11. Mechanism – Stars .................................................................................. 63

Table 12. Mechanism – Performance ...................................................................... 64

Table 13. Mechanism – Popularity .......................................................................... 65

Table 14. Change in relative preferences for top non-film family directors ............. 67

Table 15. Key variables ........................................................................................... 86

Table 16. Eyeball Evidence ..................................................................................... 87

Table 17. Summary Statistics .................................................................................. 88

Table 18. Resource Structuring ............................................................................... 89

Table 19. Resource Bundling .................................................................................. 90

Table 20. Leveraging: Mass Appeal Focus ............................................................. 91

Table 21. Leveraging: Quality Focus ....................................................................... 92

Table 22. Mass Appeal Focus: Triple DD Analyses ................................................ 93

Table 23. Quality Focus: Triple DD Analyses .......................................................... 94

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List of Figures

Figure 1. Theoretical Perspectives and Contributions: A Map for the Dissertation .............................................................................................. 11

Figure 2. The Archetypal Masala Movie ................................................................. 23

Figure 3. A Jubilee .................................................................................................. 24

Figure 4. Movie performance .................................................................................. 25

Figure 5. Creativity before and after a Golden Jubilee ........................................... 55

Figure 6. Creativity goes down after Golden Jubilee .............................................. 60

Figure 7. Popularity ................................................................................................. 66

Figure 8. Resource Management Model ................................................................ 85

Figure 9. Mass Appeal vs. Quality Focus – Summary ............................................ 95

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Preface

There is a story behind this dissertation. I was a born movie lover. As a kid, I would

starting walking up to the TV screen whenever the “action sequence” started playing. In

high school, I performed on stage, mimicked Bollywood stars, and in college, my best

friend and I dreamt up a whole Bollywood production house made up of stars from the set

of our very own acquaintances. Today, my wife tells me that I can watch anything—even

if its absolute crap. How then, could I have studied anything other than Bollywood? Well,

on the surface, it does seem like that. But the story behind this dissertation isn’t only

personal. There is also a professional story behind this work, and professionally, it wasn’t

obvious or easy.

I started my PhD in the wake of the Great Recession, when the US and European

economies were bleeding and anguishing. On the other side, the emerging markets such

as India and China were holding their ground and providing hope for the rest of the world.

Being from the Indian subcontinent, I was naturally interested in business in the emerging

economies. But as PhD research goes, my interests changed, substantially, during the

course of my doctoral studies. Much of it is happenstance, and some of it, I think, in all my

humility, is also my own compass, one that points to “interesting”. I was told: one’s

research needs to fulfill at least one of two criteria: it needs to be (theoretically) interesting

and (economically) important. Interesting and important? It doesn’t get any more

subjective than this. Years later, I realized an academic’s choice of research topic is much

like an entrepreneur’s choice of a “problem in the world” that s/he is trying to solve.

Question is, is there anybody else who think it’s a problem worth solving? Are there others

who think this research topic is interesting and important?

For the first stream of my research—not a subject of this thesis—this question was

already answered for me. John Prpić, my friend and co-author on crowd capital papers,

already thought the “movement” or phenomena of crowd technologies was interesting. I

agreed. We noticed that while authors wrote about crowdsourcing, and open innovation,

and peer production and a variety of other forms of collective intelligence methods and

practices, a generalizable framework was lacking. As Murray Davis explained in his, now

landmark, “That’s Interesting!” article, what makes things interesting is contradictions: one

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form of which was the presence of generalizability where there is seeming uniqueness.

We reasoned that the crowd phenomena was one such instance. We still believe in that.

The body of work that has come out over the years from different quarters on crowd

science, crowd innovation, crowd capability, and the eventual accumulation of crowd

capital is staggering—bolstering its interestingness and importance. Some have even

claimed that the Chandlerian firm of managerial hierarchies (after Alfred Chandler) is being

replaced by the open and flat Benklerian firm (after Yochai Benkler) [Presentation by Mike

Tushman at the Academy of Management 2015, Vancouver, Canada]. Our work on crowd

capital has strived to make theoretical contributions to this interesting and economically

significant transformation of normal work, process, R&D within organizations and even

idea generation and creativity.

Such is the size and scope of the work on crowd capital, that this dissertation work

on creativity and resource management in Bollywood was significantly overshadowed and

put aside. But understanding that one does need to graduate, during the last year of my

PhD, I literally stopped work on crowd capital to engage in a year-long of intense

immersion in theory and identification strategy for the work that is presented here. This

work forms the yin to the yang of my work on crowd capital in a two-pronged manner. First,

while crowd capital work explores the channelling of outside knowledge and creativity into

an organization to create an organizational level resource, the work on Bollywood seeks

to understand the management of creativity and resources within an organization to

optimize organizational creativity. Second, while crowd capital studies the technology-

intensive segment of creative industries, the setting of Bollywood facilitates the study of

arts-intensive creative industries.

In hindsight, I could not have possibly chosen better research streams, or ones

that complement each other more. The “entrepreneurship” zeitgeist further underscores

the importance of studying creativity and creative industries. Not sure when, perhaps

along with the rise of Google and Facebook, and the coincident improvements in

technology, entrepreneurship became the ‘it’ thing to do. From the USA to Germany to

India, didn’t matter if you were from MIT or Stanford, or from the IITs or IIMs or from Berlin,

or Waterloo or Toronto, engineering and business students alike wanted to follow the path

of entrepreneurship. I have been overwhelmed by this sentiment. I don’t have a baseline

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comparison but there seems to a significant exuberance around entrepreneurship in

recent times. Much of this exuberance is built on the foundation of exponential growth in

data, through digitization: the process of capturing previously ignored consumer, process,

and supply chain behaviour digitally. A whole ecosystem of business-technology

buzzwords such as big data, compete on analytics, machine learning, and of course

crowdsourcing and so on and so forth now exists and has entered the everyday

vernacular. It is no surprise then that entrepreneurs who saw clarity and opportunities in

this befuddling terrain took advantage of it.

This is good for research. I talked about the development of my research on

creative industries in this preface, and I also went on to summarize in this preface the

independently but coincidently rising waves of entrepreneurship, technology, and the

business-technology buzzwords ecosystem—on purpose. The interacting nature of

technology, business, and creativity, is not obvious because academic literatures, and

even industry scholarship, very often propagate independently. However, it is precisely

this three-way interaction that produces entrepreneurship: the engine of all economic

activity. While the papers in this thesis do not directly speak to entrepreneurship, I do

intent to make amends through future work in the stream. I end with a firm belief that it

has never been a better time to study creativity, whether in the arts or in science and

technology. Creativity—novelty and usefulness in thought and action, through

recombination and deep expertise—has simply become mandatory in this context. It is

indeed the cradle of technology, of entrepreneurship, and of arts. I hope that the readers

gain some value from the work presented here, and it inspires them further to pursue

research on this interesting and important topic.

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Chapter 1. The Promise of Creative Industries for Strategy Research: An Introduction

In this chapter, I provide an overview of my dissertation. In particular, in section

1.1, I outline the potential for research on creative industries, highlighting the theoretically

interesting and economically significant nature of these industries and identifying several

areas that merit further investigation. I then summarize the motivations and key

contributions of my study. In section 1.2, I summarize the empirical and identification

strategy I use to answer my research questions. In section 1.3, I summarize how this study

contributes to strategic management theory, I reiterate how creative industries can serve

as a setting for strategic management research that has broad implications, and I offer an

agenda for future research.

1.1. Creative Industries – Research Need and Potential

Studying creative industries is valuable to strategy scholars for at least two

reasons: these industries are economically significant, and they offer theoretical insights

into competition and strategy in general (Agrawal, 2005). Creative industries are those

that require unique talent in either science or arts; in them, intellectual property is an asset,

and proprietary goods and services are expected outputs. They play an important role in

economies around the world (Flew, 2012). As such, they are receiving increasing attention

from scholars (Caves, 2000, 2003; Florida, 2005; Florida, Mellander, & Stolarick, 2012).

In the UK, the creative industries employ approximately 1 million people and are growing

at roughly 5% annually, much higher than the overall economy (The Work Foundation,

2007); in India, the media and entertainment industry alone is worth $16 billion (India

Brand Equity Foundation, 2013); and in the US, arts and culture account for 3.2% of the

economy (National Endowment of Arts, 2013). However, despite their economic

2

significance, our theorizing of these industries remains nascent. We are still ignorant of

the best practices and policies for many of these industries, and have done little to

generate generalizable management insights from these settings.

Because economics and management scholars consider creative industries to be

anomalous outliers, they often avoid both investigating the industries’ business strategies

and considering their place as competitors in the global economy (Caves, 2000; Lampel,

Lant, & Shamsie, 2000). However, understanding competition and strategy in these

industries is increasingly crucial for firms even outside this context because the industries’

salient problems, such as optimizing product novelty, catering to product demand versus

creating it, and optimizing team composition, are prevalent in a large number of firms

outside these industries. Through this dissertation, I strive to address this theoretical and

empirical need to better understand creative industries and in the process to advance

strategic management theory. To do so, I apply empirical approaches of causal

identification to the data from the largest and most important creative industry in India—

the Hindi film industry, also known as Bollywood. In particular, I investigate the

consequences of shock brought about by success in the film industry on creativity and

resource management.

In chapter two, I provide a detailed introduction to the research setting—

Bollywood—and provide reasons on why it’s an excellent laboratory for my studies.

Bollywood is one of the largest creative industries in the world, both by turnover and by

viewership (BBC, 2013; Ganti, 2013; Lal, 2013). It generates more than $3 billion per year

in revenue (Deloitte & ASSOCHAM, 2011), employs close to 200,000 individuals (Lal,

2013), and with its nearly 3 billion annual ticket sales, dwarfs Hollywood (BBC, 2013). With

the recent easing of regulations, Bollywood has seen an inflow of foreign funds and

international players. For instance, Disney purchased UTV, a large Indian film production

studio, for an undisclosed amount. Other corporations such as Warner Bros. and

Columbia Pictures have also forayed into Bollywood. The industry shows no signs of

stopping; some industry estimates indicate that Bollywood will continue to grow at its

current rate of 9%, which is much higher than the overall growth rate not only for India but

also for most other world economies (Deloitte & ASSOCHAM, 2011). Therefore,

3

Bollywood, a large and profitable creative industry with tremendous influence and

economic significance, is a role model for fledgling creative industries around the world.

Several unique features make Bollywood a suitable research site for studying

creativity and resource management. First and foremost, relationships are paramount in

Bollywood (Ganti, 2013; Shukla, 2013). As a result, it is a good setting for studies

pertaining to actors with long standing relationships, understand the value of relationships

for acquiring and managing resources, and the value of connections to creative

production. Second, the fact that actors are the primary resources in the industry allows

us to measure the quality of resources that directors are able to acquire and manage.

Third, Bollywood has an established and institutionalized measurement for performance:

jubilee. This binary measure of success, based on the length of a movie’s run in theatres,

further assists us in circumventing the problem of heterogeneity in creative performance.

A fourth feature of Bollywood that is important for my analysis is its art form; it is what has

been called the masala movie genre (Ganti, 2012). Masala, literally meaning spice mix, is

a film genre in Bollywood that formulaically mixes action, comedy, drama, and romance

for mass entertainment. This unique feature helps to develop a recombinant and

divergence based measure of creativity and a measure of how resources are managed

and leveraged in a creative industry.

In sum, chapter two highlights the salient features of Bollywood. It compares and

contrasts Bollywood with Hollywood and presents rationale that make Bollywood an

excellent laboratory to arrive at management theories and insights that have wide

applications and can help us draw implications for policy and practices in other creative

industries.

In chapter three, I investigate the question: Does success diminish creativity?

Research on science and arts intensive industries suggests that the impact of success on

subsequent creativity is unclear. On the one hand, higher possibility of recombination

(Kaplan & Vakili, 2014; Weitzman, 1998), better access to resources (Currah, 2006;

Wankhade, 2009), and membership enhancement in one’s field (Azoulay, Zivin, & Wang,

2010) can enhance creativity following success. On the other hand, high costs of further

exploration (Levinthal & March, 1993; March, 1991), category spanning discounts (Wry,

4

Lounsbury, & Glynn, 2011; Zuckerman, 1999), and downsides of narrow focus (Amabile,

1988) can lead to diminished levels of creativity after achieving success. To address this

empirical puzzle, I employ difference-in-differences (DD) methods to test the impact of

success on creativity and investigate the underlying mechanisms driving the focal

relationship. Using time- and unit-specific fixed effects and unit-specific time trends in my

panel data analyses, I am able to control for the often confounding nature of tenure and

individual specific arguments for creativity (Galenson & Weinberg, 1999; Miller & Shamsie,

1999). This study will find, first and foremost, that success diminishes creativity. Second,

it will find that it does so disproportionately for individuals who experience the biggest

shock in popularity after success. These individuals resort to formulaic creative production

and continue to cater to the masses in order to preserve their long-term popularity. By

ruling out alternative mechanisms that might drive creativity, the study advances our

understanding of motivations for creativity. Moreover, it has applications for incentivizing

creativity within organizations, at the industry level.

In chapter four, I employ a similar quantitative approach to address the question:

How do -managers transform resources to create value? An enduring criticism of the

resource-based theory (RBT) of the firm has been the lack of predictability and testability

of propositions (Barney, Ketchen, & Wright, 2011). The notion that managers need to

manage their resources in addition to simply owning them in order to create value has

added richness to RBT, and opened up questions about, for example, how managers can

acquire, enrich, and leverage their resources to create value (Sirmon, Hitt, & Ireland, 2007;

Sirmon, Hitt, Ireland, & Gilbert, 2011)? I address these open questions about RBT in the

fourth chapter. In doing so, I make both empirical and theoretical contributions to RBT by

developing new measures for resource management processes of resource structuring,

bundling, and leveraging. First, the results of the investigation in this study provide

suggestive evidence that family-related managers in fact divest their resources to work

with smaller teams after achieving success. Second, it will find that in terms of resource

bundling, managers are able to enrich their resource base by attracting stars. And finally,

the chapter will find that the manner in which managers leverage their resource also

hinges, crucially, on their status within the industry. The results indicate that while family-

related managers (directors in this case) employ a quality-focused leveraging strategy, the

managers without such connections employ a mass appeal focus in their resource

5

leveraging. Therefore, while management scholars might be more focused on the market-

driven leveraging strategies in firms, the study underscores the background and

motivations of manager themselves as an important determinant of firm’s resource

leveraging strategy. The finding extends RBT and has implications for several other

industries operating in environments where resource acquisition (and blocking) are vital

to firm strategy and competitive advantage (Mezias & Mezias, 2000; Sirmon & Hitt, 2003).

Befitting my motivations for studying creative industries, the dissertation

collectively aims to inform areas of management theory where the context of creative

industries can be leveraged to generate actionable and generalizable managerial insights.

The Venn diagram (Figure 1) below summarizes the areas of management theory to which

this dissertation strives to contribute. Additionally, it also presents a map for the readers

to help them navigate the dissertation. Through this collection of studies, we also come to

know much more about the central circle, which is the context of creative industries (in this

case, Bollywood). Indeed, to the best of my knowledge, these investigations represent

one of the first data- and causal identification-driven studies of the industry. Additionally,

each of the overlapping circles represents the two areas of strategic management theory

that the chapters strive to contribute to: the study of creativity and of resource

management.

1.2. Data and Identification Strategy

One of the remarkable features of Bollywood is its ability to assist in

operationalizing constructs that often are difficult to measure and facilitate causal

identification in empirical analyses. For the 2 empirical chapters in the dissertation, I

employ difference-in-differences (DD) estimations on archival data to arrive at a clear

identification of causal effects. In my analyses, I used the Internet Movie Database (IMDB)

to collect archival data on the movies released in Bollywood and the key artists and

producers who worked on them. The database includes more than 20,000 artists who

acted in approximately 10,000 films. This comprises the entire population of movies

produced in Bollywood between 1930 and 2014. I then matched movie data with box office

success indicators, which I collected from Trade Guide magazine archives at the National

Film Archives of India (NFAI), Pune, India. A host of recent studies on the film and

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television industries (Cattani & Ferriani, 2008; Delmestri, Montanari, & Usai, 2005; Soda,

Usai, & Zaheer, 2004) follows a similar approach; these studies use film credits, which

they combine with other secondary data for analysis. Once I had gathered all the critical

data, I prepared a master dataset, which I used to test the hypotheses in my investigations.

I briefly discuss the identification strategies I use in my dissertation here. Cook &

Campbell (1979) list three major conditions for causal identification: temporal precedence,

a relation between cause and effect, and the ruling out of alternative explanations.

Throughout the dissertation, I consider Cook and Campbell’s (1979) criteria for causal

assertion. Additionally, I incorporate econometric and contextual considerations into my

analysis. In my dissertation, temporality and cause and effect aren’t a concern: the cause

takes place before the predicted effects, and there is sufficient theoretical and contextual

reason to believe that cause and effect are correlated. To rule out alternative explanations

and to establish a crisp treatment variable, as is necessary to assert causality in empirical

research, I first exploit the institutional quirk of calling filmic productions in Bollywood

jubilee movies. With jubilee as a treatment, I employ DD estimations to answer my

research questions. DD identification strategies have been successfully used to explore

fluctuations in academic creativity in the sciences (Azoulay et al., 2010; J. Singh &

Agrawal, 2011) as well as for situations concerning policy changes (Angrist & Pischke,

2008; Card, 1992). The identifying assumption in the DD methodology employed here is

that the jubilee event is not correlated with the error term, conditional upon the controls.

In other words, there is no common shock to jubilee and the primary dependent variables

for a particular director—this identifying assumption is tantamount to the third criteria of

ruling out alternative explanations as presented by Cook & Campbell (1979). The results

I present incorporate a full set of controls: director and year fixed effects; director-specific

time trends, controlling for any time-specific common shocks (both director-specific and in

general). Conditioning my treatment upon a full set of controls, coupled with the inherent

unpredictability in movie performance (Caves, 2003; Goldman, 1989), adds reasonability

and credence to the causal assertions within the empirical studies.

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1.3. Contributions and Directions for Future Research

I make three distinct sets of theoretical contributions through this dissertation. In

particular, I provide an exposition for and firmly establish the potential of creative industries

as a setting for strategy research. Furthermore, I take steps toward arriving at a better

understanding of how success impacts creativity. I also extend the RBT of the firm by

shedding light on resource management for value creation. In sum, I advance the

respective fields of creative industries, creativity, and RBT in the following substantive

ways:

• Creative Industries: The resource-intensive nature of creative production and the

unique feature of creative industries make an excellent setting for strategic

management research related to resources and creativity management. Since both of

these need to be managed in the modern organization, the creative industries, which

scholars have tended to ignore, have much to contribute to theory development.

• Creativity: While success diminishes creativity overall, the decline is

disproportionately significant for artists who experience the biggest shock in terms of

popularity, and who, in order to maintain the new level of popularity in long term, need

to engage in creative production that caters to the masses.

• Resource-Based Theory and Resource Management: Managers belonging to

experienced film families are disproportionately better than -managers not belonging

to film families at resource bundling. In addition, managers are also able to leverage

these resources to create products focused on quality rather than on mass appeal.

Not only do these contributions address the theoretical need earmarked in the

literature, but they also have implications for practice and policy in creative industries. In

terms of policy, many Western countries have already identified the creative industries as

a growing area of economy (Flew, 2012; Flew & Cunningham, 2010). My dissertation, the

first data driven industry analysis of Bollywood, underscores the need for policies that are

conducive to the creative industries that have largely been ignored by the policy makers

in many developing nations. The fact that it was only in 2001 that the Indian film industry

received an ‘official’ industry status is testament to the neglect creative industries can

suffer at the hands of policy makers. The results of the investigations point to a clear case

8

where experienced family firms and entrepreneurs are key drivers of creativity and

entrepreneurship in this tightly knit, informal industry. Policy makers should be cognizant

of the fact that family businesses in creative industries are entrepreneurial and value

creators; this perception starkly contrasts their dark, rent-expropriating image (Bertrand,

Mehta, & Mullainathan, 2002).

A proper model for financing for creative, project-based ventures is another need

highlighted by the results of this dissertation. By many accounts, the percentage of people

engaged in the creative economy ranges anywhere from between 5% (for Mexico) and

35% (for Ireland). Indeed, top media groups such as Disney and Time Warner enjoy the

same financial clout as leaders in other industries (Aageson, 2008), and for some

economies these creative industries have proven to be saviors (McCall, 2004). Despite

this, the successful entrepreneurs do not experience any increase in financial availability.

Movies are still, as a rule, informally financed at high interest rates. With the growing global

economic significance of creative industries, often project-based in nature, the issue of

financing needs and channels to be addressed.

Studying activities such as filmmaking also enables us to better understand the

industry dynamics of similar creative phenomena elsewhere. In particular, the dynamics

of Bollywood can benefit practitioners in a variety of other creative industries. Judging from

the financial success of the industry, its model can serve as an exemplar for dozens of

fledgling creative industries around the world, such as the Nigerian film industry, which

has been touted as the savior of the country’s economy (McCall, 2004). The results also

have implications for creativity and innovation management and the use of resources

across industries. To begin, the studies suggest that financial and popularity-based

incentives should complement creativity management within functional groups. The study

also highlights the importance of key influencers—the embedded players—in affecting

overall creativity, risk taking, and quality. Consequently, managers need to incorporate the

impact the star performers can have on team and firm performance into their management

strategy. Finally, the studies suggest that the use of resources by the manger is not always

market-driven, but rather is also influenced by the manager’s background and motivations.

Executives need to be aware of these underlying drivers of resource management.

9

The study also makes several empirical contributions. A major hurdle to studying

creativity is in determining how to measure it (Amabile, 1982); I have been able to

overcome this problem by using a recombination and divergence based measure. Though

specific to this context, the study paves the way for developing further measures of

creativity and creative risk taking by leveraging the idea that creative risk is divergent from

but nestled in a homogenous context. Data and measurement concerns have also long

thwarted efforts within the RBT (Barney et al., 2011; Sirmon et al., 2007) and

entrepreneurship research (Ferriani, Cattani, & Baden-Fuller, 2009). This dissertation

overcomes these hurdles by introducing new measures, or the three resource

management processes: structuring, bundling, and leveraging. Finally, I have been able

to address well-documented concerns about common threats to identification in creative

settings (e.g., tenure of artists, time-varying zeitgeists, and artist-specific trends)

(Galenson, 2010; Galenson & Weinberg, 1999; Weinberg & Galenson, 2005) by utilizing

the context of Bollywood and by employing a full set of controls in my DD estimations.

The study of creative industries provides opportunities to develop management

and entrepreneurship theory along several other dimensions as well. First, in today’s

business environment, where innovation and novelty are paramount, firms in, and even

outside, creative industries constantly strive to be novel in ways that are nevertheless

familiar and accessible (Lampel et al., 2000; Mezias & Mezias, 2000). Therefore, research

questions about striking the balance between product novelty and familiarity are worth

further exploration. Second creative industries face a heightened level of tension between

market construction and catering to market demand (Ganti, 2012; Lampel et al., 2000),

where the artists are constantly trying to create a new market for their product while

simultaneously catering to the market demands. This represents yet another area for

future research. Third, creative industries are accustomed to dealing with the compromise

between the power of an individual—a star—and the efficiency of a creative system.

Research has addressed the tradeoff between ‘old timers’ and new casts (Cattani &

Ferriani, 2008), but the implications of the tradeoff between big stars and the regular cast

on firms’ creative and financial performance still remains underexplored. Last but not the

least, creative industries such as Bollywood are often based on projects. Artists in this

setting have been referred to as project entrepreneurs (Ferriani et al, 2009) since they

need to reemploy and redeploy resources continuously as they move from one project to

10

the next. There is tremendous potentially to elaborate upon this stream of research by

building on the work presented here. I hope that scholars in management and

entrepreneurship, buoyed by the promise of creative industries as a laboratory for

advancing research, will join me in addressing these research needs in their future work.

11

1.4. Figures

Figure 1. Theoretical Perspectives and Contributions: A Map for the

Dissertation

Creative Industries Creativity

ResourceBased Theory

12

Chapter 2. The Setting: Bollywood

Both creativity and resource management studies have been plagued by empirical

concerns. On the one hand, a central problem to the study of creativity is defining and

measuring creativity itself (Amabile, 1982). Creativity is context dependent and has been

measured using specific tests, objective assessment of outputs, and even subjective

judgment (Amabile, 1996). On the other hand, development of the primary theoretical lens

that management scholars use to study resources—the resource-based view of the firm—

has also been limited because of the concerns of measurements and testability (Barney

et al., 2011). The setting of Bollywood is exceptionally well-suited for studying both, and

could help to fill an important gap in research by doing so. Indeed, one of the most

significant contributions of this dissertation is on these empirical fronts. In this section, I

combine historical exposition with analytics to present Bollywood as a suitable context for

this dissertation. This section strives to provide a basic background of Bollywood to the

reader; it compares and contrasts Bollywood with its older and economically larger

counterpart, Hollywood, and highlights the salient features that offer research advantages

over using Hollywood as a setting. Admittedly, it can’t do justice to the color and chaos

Bollywood movies emit.

2.1. Compare and Contrast: Hollywood and Bollywood

The arrival of the Lumière brothers’ Cinématographe at the turn of the 19th century

simultaneously catalyzed the imagination of filmmakers in the American continent and the

Indian sub-continent. As such, it is not surprising that the two film industries have

developed along similar trajectories in terms of both the evolution of the industry and the

art of filmmaking itself, with Bollywood marginally lagging behind its counterpart. For

instance, In Old California, the first Hollywood movie, was made in 1910, while Raja

Harishchandra, the first Bollywood movie was made in 1913. Similarly, sound came to

Hollywood and Bollywood in the 1920s and 1930s, respectively (Ganti, 2012, 2013).

However, Bollywood has lagged further behind in filmmaking innovations such as visual

13

effects and computer graphics; the industry is only now beginning to realize their power

and possibilities, applying them to movies such as RaOne (2011) and Krrish 3 (2013).

In terms of industry evolution, both Hollywood and Bollywood have withstood the

turmoil of both World Wars as well as changes in industry structures over the past century.

Both film industries were organized around studios until the 1940s. The pressures from

regulators and the impact of World War II saw the studio system disintegrate into a more

horizontal structure in Hollywood (Lampel & Shamsie, 2003). Studios in Bollywood also

failed to survive the turmoil following the Second World War (Ganti, 2013). The studios in

Bollywood, however, never controlled the distribution and exhibition of their films and were

never quite as powerful as studios in Hollywood. As a result, few studios survived the

turmoil following the Second World War and the Indian Independence. In Bollywood, from

their rubble arose firms that came to be known as production houses and were often led

by families of filmmakers. Today, just as the studios in Hollywood dominate the industry,

so do the film families in Bollywood command considerable clout over the operational

workings of the industry.

As creative industries, both the film industries rely on the input of unique resources;

these resources tend to be both creative and “humdrum” (Caves, 2003). While creative

input includes the human capital that is used in a movie, the humdrum inputs include the

capital, technology, and supply chain built to facilitate production, distribution, and

exhibition. These humdrum inputs are often resources that are systemic in nature (Miller

& Shamsie, 1996). As a result, bigger studios and bigger production houses have better

access. The unique resources in the production process are, of course, those actors

starring in the movies. The lead stars in both industries have significant fan following, hold

considerable power at the box office (Elberse, 2007), and are generously remunerated

(Elberse, 2007; Ganti, 2012). Due to the project-based nature of film production, social

relationships are of great significance to individuals in both industries. Thus, patterns of

repeated collaboration and transactions with actors embedded in one’s networks are also

common to both the film industries (Lorenzen & Täube, 2008; Sorenson & Waguespack,

2006). The difference, again, is that while major studios and distributors hold these

embedded positions in Hollywood, it is the families who have been making movies for

multiple generations that command embedded positions in Bollywood. Even though

14

collaborations and transactions are present in both industries, the informal nature of work,

i.e., the lack of formal contracts (Lorenzen & Anderson, 2012) and the presence of latent

or temporary organizations that perform specific tasks during the production process

(Ganti, 2013), are particularly heightened in Bollywood.

Both industries also face the demand uncertainty that is fundamental to creative

industries (Caves, 2000). As a result, producers utilize a variety of tactics such as using

big stars, marketing, and facilitating their distribution and exhibition adroitness to hedge

their risks. In Bollywood, in fact, this uncertainty has led to the development of a specific

type of formulaic art form called the masala genre, discussed in detail below. The lack of

other entertainment options and the corresponding status as the de facto source of

entertainment for all facets of the audience also gave rise to the dominance of this

formulaic art form. While Hollywood film studios also heavily rely on the replication of

previous formulas and ideas (Miller & Shamsie, 2001), they inhabit a generally different

environment compared to Bollywood production houses in that Hollywood viewership is

variegated and wide enough that genre experimentation is seen as innovative (Perretti &

Negro, 2007); and experimentation and expression in cinema in the spirit of Caves’ (2000)

“arts for art’s sake” not only prevails but is also often rewarded by the markets.

In addition to the dominance of a formulaic art form, several other unique features

of Bollywood distinguish it from Hollywood. For instance, until recently, Bollywood’s reach

and revenue were miniscule compared to Hollywood’s. Even now the top grossing

Hollywood movies have revenue that is an order of magnitude higher than the top

performing Bollywood movies. Similarly, while Bollywood boasts tremendous ticket sales

(BBC, 2013) and a huge ecosystem of employment (Lal, 2013), its geographical reach is

still generally limited to India and major Hindi speaking Indian diasporas. On the contrary,

Hollywood movies have a global reach, in English, subtitled, or dubbed versions. Finally,

for the purposes of this investigation, another key differentiating characteristic of

Bollywood is its unique measure of success, based on the number of weeks a movie runs

in a theatre as opposed to the revenue. The latter measure of success overcomes the

problems of considerable heterogeneity in measures of success: endemic to all empirical

investigations situated in creative industries. For the questions that this thesis investigates,

an industry established binary measure of success is present, facilitating an empirical

15

investigation geared toward causal identification of relationships. I discuss in detail, these

unique characteristics in the rest of the chapter.

2.2. History and Background

The evolution of Bollywood is inextricably linked with the history of India. Even

before movies were made in India, a slew of unique theatrical and musical traditions

coexisted in the nation. The Vedas and the Holy Scriptures, like the Ramayana and the

Mahabharata, were written in verse so that laypeople could understand and remember

them, and transmit the knowledge through smriti, memory. When cinema arrived in the

late 19th century, the artists found a medium where they could channel and express what

they had practiced for a long time: they found a medium where dance forms like kathakali

and theyyam could co-exist, as could Rajasthani and Bengoli, classical, and even Western

music. The artists, coming from places all over such as Lahore and Ludhiana, and from

Bengal and Bihar, found ways to express their own folk music, characters, and stories on

celluloid.

This history is also intertwined with the nation’s simultaneous political and

economic struggles, as alluded to earlier. As India emerged from the shadows of the

British Raj and democracy came of age, cinemas depicted and led the nation’s cultural

evolution, with movies both reflecting and leading the tones of the society. As explained

by the acclaimed director Dipankar Banerjee (see notes for Figure 2), in a country devoid

of many entertainment options, cinema easily established a strong foothold and became

the default entertainment source for an entire country. Bollywood continues to be the

single most important cultural phenomenon in India; it is a reflection of and guide to the

thoughts and aspirations of hundreds of millions of people in India (Dwyer, 2010). Several

salient features of Bollywood make possible an explicit investigation of the impact of

success on creativity. Here I discuss the central characteristics that are important for our

analysis.

16

2.3. Features of Bollywood: Relationships, Jubilee, & Masala

Several striking features make Bollywood a suitable research site for studying

creativity. First, relationships are paramount in Bollywood (Ganti, 2013). The writing of

scripts, the signing of movies, and even their financing is frequently executed in a

personal, informal manner, in contrast to the more formal tendencies of Western motion

picture industries (Ganti, 2012). Reputed Bollywood producers rarely even have their lead

actors or directors sign contracts; anecdotes of work done in good faith—without

payment—by actors for their producers are also abundant (Lorenzen & Anderson, 2012).

Extending the informality and personal nature of business, the production of movies itself

tends to be a flexible effort, with specific tasks being delegated via contract to independent

teams, or even to latent firms (Starkey, Barnatt, & Tempest, 2000) that are involved with

the movie for only that aspect of the production. Such flexibility allows producers to engage

teams of technicians, lighting, production, and direction assistants in a piecemeal manner

through a combination of contracts and handshake deals (Steier, 2001).

The informal, relationship-oriented nature of putting a team together is highly

influenced by the embeddedness of the directors in the industry network. Leading actors

rarely work with directors that they do not know or with those who do not have a track

record of success. One of the directors explained: “Basically, stars have a group of people

they work with—in rotation. First it’s A, then B, and if C is sick, it’s D and so on.” More

often than not, the directors A, B, C, and D all have a proven track record of hit movies or

are old family-friends. Bollywood is home to families or dynasties of actors and directors

who have been in the industry for several generations. As a result, these dynasties are

embedded in the industry network and exercise considerable clout within the industry. I

refer to directors with connections to these embedded film families as ‘film family

directors.’ In terms of acquiring resources for films, the influence of the film family directors

is an important consideration. In an environment where there are only so many good, or

‘star’, actors, only a limited amount of directors can acquire the services of their resources

and leverage or employ the actors accordingly. In fact, in doing so, these directors not

only acquire top human capital but also block the access to this resource for other

directors, who cannot access the top actors once their schedule is already booked.

17

A recent Bollywood actress also admitted that there is an unspoken “quota system”

for the so-called “star kids”, actors, actresses, and directors whose family has been in the

industry for a generation or more. These star kids already have inside connections to land

film projects, which may persist after their first contracts in a way that will prolong their

careers. Data bolsters the claims of the star kids’ quota system and the rotation-based

collaborative networks of leading stars: A remarkably high proportion (57% compared to

23%) of film family directors collaborate with top quintile lead actors compared to non-film

family directors (see Table 1).

Until as recently as the early 2000s, Bollywood movies were shown in large, single-

screen theatres with capacity of up to 1000 seats; such an arrangement starkly contrasts

movie shows in the West, where multiple movies run at the same time in a cinema mall

with much smaller auditoriums. The traditionally low numbers of screens and large cinema

theatres have persisted in India to the present day; the screen to population ratio in India

remains one of the lowest in the world (Dua, 2006). The prevalence of these scarce single-

screen movie shows have determined the revenue model in Bollywood for decades. In

particular, faced with limited options, moviegoers flocked to the theatres for extended

periods of time after release of a popular movie. Distributors and exhibitors ran the same

movie for as long as they could fill the auditoriums so that that they could appropriate more

rents from the same sunk investments: cost of movie prints. As a result, an industry-

institutionalized measure of success developed based on how long the movie ran a

cinema hall. I leverage this feature of the industry to capture the financial success of

movies in Bollywood, notorious for concealing and manipulating box office figures, and for

my identification strategy. This peculiarity that is important for my research design is the

notion of jubilee movies, movies that run 25 or more weeks at a cinema hall. In Bollywood,

a jubilee movies is one that has run in cinema halls for more than 25 weeks. Several

variations of jubilee movies exist: A movie that runs 25 weeks is a silver jubilee, 50 weeks

is a golden jubilee and so on. Being a jubilee movie, is thus the indicator of commercial

success and the ‘treatment variable’ in my research design. Figure 3 presents a sample

celebratory and congratulatory commercial in Trade Guide, the definitive Variety-style

weekly magazine for Bollywood for a movie that went past 50 weeks, a golden jubilee, at

the box office. Such advertisements celebrating the success of a film and its main cast

18

and crew were the customary means of attracting attention and casting spotlight on the

movies’ team. This served as a means to attract capital and stars for future projects.

The celebratory commercials are not unwarranted and the rarity and importance

of these jubilee events deserve attention. The jubilee movies, and particularly the golden

jubilee productions, are extraordinary achievements for directors and the entire team

involved. For instance, my sample shows an average of about 3 golden jubilee movies per

year. Movies that go beyond 50 weeks in a theatre, of course, are exponentially rarer. For

comparisons sake, a golden jubilee can be likened to a blockbuster in Hollywood, whereas

any movie that goes beyond 50 weeks to achieve, say, diamond (60 weeks) and platinum

(75 weeks) jubilees can be considered equivalent to all-time blockbusters in Hollywood.

To gain some more perspective on their rarity, consider this: In my sample, less than 10%

of the movies attain a silver jubilee (25 weeks) and about 15% of the directors in the

sample ever achieve this accolade in their entire careers. Figure 4 provides a visual

representation of this state of affairs in Bollywood. As the density plot demonstrates, the

mean number of weeks at the box office for Bollywood movies is 5; jubilees are, thus,

extremely rare achievements, spotlight and celebrations following which seem natural.

Finally, a third feature of Bollywood that is important for my analysis is what has

been called the masala movie genre (Ganti, 2012). To reiterate, masala, literally meaning

spice mix, is a film genre in Bollywood that formulaically draws on the conventions found

in a variety of action, comedy, drama, and romance genres for mass entertainment.

Scholars and practitioners attribute the dominance of masala movie in Bollywood not just

to mass appeal but also to historical and cultural diversity present in India. This cultural

diversity resulted in directors engaging in a range of cultural appropriations from all over

the country. Thus, over time, the masala genre came to dominate India’s film industry; it

became the signature genre for Bollywood because, through its combination of genres

and cultural expressions, it caters to the diverse cultural populace of India. Figure 2

provides an example. The movie poster features one of the most successful actors of all

times in Bollywood, Amitabh Bachchan, in a landmark movie of the 1970s—Mr. Natwarlal.

I chose this particular poster to illustrate the masala genre because it is a quintessential

masala movie. First, the movie poster itself depicts what the masala genre stands for:

there is the lead hero and the heroine in romantic and dramatic poses, the villain, a mob,

19

bomb blasts, and the icing on the cake is the tiger in the background. Each of these

individual elements, in itself, can be the topic of an entire Hollywood movie. In other words,

one can imagine, an action movie with mobs and bomb blasts, or a romantic musical, or

an intense court room drama, or even a movie about a relationship involving a pet or an

animal at the center. But all of these themes together? Whether one is an experienced

Bollywood moviegoer or a modern day movie buff looking to get an appreciation for

Bollywood movies, how all these elements mix together in a single movie is befuddling,

and potentially even problematic. How could such diverse and discordant set of ideas mix

together and create entertainment value?

But all these elements do fit into a masala movie and they do become sources of

mass entertainment, just like they did in this particular instance. In fact, hundreds of

movies are made in Bollywood every year similar to this prototypical masala movie. To

accommodate such a diverse array of themes in a movie, the filmmakers rely primarily on

two things: length and script. Like most movies in the 1970s, and even today, Mr. Natwarlal

had an ‘intermission’ in the middle of the movie. An intermission is a 15-minute (on

average) break during the movie when people take time out to stretch, get more popcorn,

and use the restroom or whatever else they need to do. After the intermission, people

resume watching the movie. This makes sense because amalgamating romantic musicals

and dramatic scenes along with bomb blasts necessitates significant storytelling. As a

result, Bollywood movies tend to be about 2.5 hours long and have story lines, often quite

loose and forced, that are close to a saga than they are to a movie script. Though on

surface, this mélange of cinematic themes appears to be rather crude and fantastical, and

often times the movies do turn out to have poor creative value as one might expect, the

art form of a masala movie is also a director’s best bet. This particular movie remains, to

this day, one of the biggest hits of Bachchan. Thus, despite the facetious exterior of a

masala movie, as encapsulated by this poster, the masala movies is a serious and

successful art form.

In an India with limited alternatives for entertainment such a mélange of cinematic

themes had a massive appeal. Though many directors are breaking away from making

masala movies such as Mr. Natwarlal, yet a slew of directors are involved in making

mainstream mass entertainment products such as this despite the downsides of mixing

20

these disparate elements in terms of long, often loose and forced, saga-like storylines and

breaks in the movie because of intermissions. Even as the Indian audience gets exposed

to more alternatives to cinema, majority of leading actors are involved in the masala

movies today and the genre still has a stronghold on the Indian audience. Mr. Natwarlal is

not the only hit movie of Amitabh Bachchan to mix masala genre elements. In fact, many

of his best performing movies have combined the masala elements through the past

decades. The fact that the leading actors and actresses even today repeatedly engage in

creative products that are essentially based on the same masala formula of action,

comedy, romance, and drama, speaks to the dominance and longevity to the art form.

Further, the dominance of the masala elements in a movie is underscored by the fact that

a massive 60% of the movies in my sample do not have a non-masala tag: In other words,

60% of the total movies are made by formulaically mixing action, comedy, drama, and

romance. Table 1 provides simple correlations of the key variables, which will be

discussed in more detail in chapter 3. It comes as no surprise that the bivariate correlations

for both performance and popularity are negative for movies that diverge from the

formulaic masala genre.

2.4. The Production Process

The production of a movie in Bollywood can be divided into three distinct stages:

pre-production, production, and post-production. There is considerable operational

flexibility in all three stages. During the pre-production stage, the director is deeply

involved with the key members of the team such as the writer, music directors, and

producer. Once the idea has been agreed upon, the idea is then narrated by the directors

to the stars of the movies and the producers, as opposed to the delivery of fully written

scripts. During this ‘face time’ with the potential cast and crew, directors aim to convince

others to work on the project. Once this has been achieved and the stars and producers

have joined the project, it moves to the next stage: production.

The production of the movie is also a ‘flexible’ process, with studios, production

crew, technology, choreography, and directorial assistants all coming together in a

piecemeal manner to create the movie. The distributors buy the right to distribute movies

for a period of 5-10 years, the anticipation being that the movie will be made within that

21

time period and will run for another year or so in different cities within that territory. The

distributor usually provides a minimum guarantee to the producers (about 30-40% of the

sum) at the very onset of the production. In this way, a reputed producer is able to raise

money instantly before s/he even beings production. When the print is released, the

distributor pays for the print, publicity, and the theatre rental. The distributor and the

producers then share any proceeds and commission equally, after the distributor costs. In

such a system, the distributor bears most of the risk, since the producer is guaranteed a

certain sum of money by selling the distribution rights. As a result, the use of jubilee as a

measure of commercial success of a movie is rightly based upon the profits that a

distributor can make by collecting rents from showing the same prints over a long period

of time.

2.5. Conclusion

In sum, Bollywood provides a rich setting for analyses on creativity and resource

management, which I undertake in the remainder of the dissertation. In terms of creativity

research, Bollywood provides a means to measure creativity based on divergence and

recombination and to control for time, individual, and individual-specific time trends that

obfuscate causal identification of relationships surrounding success and creativity.

Because of a lack of hypothesis testing, resource-based theory has, for a long time, been

relegated to the level of “view.” However, Bollywood lends itself to investigations that could

give RBT some empirical impetus. Directors, tantamount to -managers in this setting, have

to routinely acquire and manage resources for their creative production. Having access to

star performers and collaboration networks provides me with the requisite data to perform

these theory-enhancing investigations and contribute to the RBT.

The study’s theoretical and empirical contributions notwithstanding, the study also

improves our comprehension of a thriving creative industry that remains the most popular

and influential cultural phenomenon in India. A better understanding of this understudied

but booming industry not only helps boost the commercial success but also assists in

preserving the cultural fabric of our society. When filmmakers express themselves through

their movies, they imprint in their products their own creative, cultural, and ethnic

backgrounds, as well as their version of India. Lately, the individual expression of directors

22

(in divergence from formulaic creative production) has found voice as well as financial

success in mainstream Bollywood. We now see Indian characters that we hadn’t

previously seen in Bollywood movies. Bollywood is no longer only about the ‘song and

dance’ and the larger-than-life commercial movies but also about the ordinary Indian who

lives outside of the metros—in U.P., Bengal, and Kashmir. This India, outside of song and

dance and different from the metropolitan cities, is represented and preserved when the

likes of Anuraag Kashyap and Dipankar Banerjee are able to express their novelty through

their movies. Learning the underpinnings and motivations of a lucrative creative industry,

can aid us in encouraging new creative entrepreneurs and new forms of creative venturing

elsewhere. This is of significance not just for economic reasons but also for cultural

issues—preserving the diverse cultures and histories is of interest to all. Eventually,

preserving the creative and cultural landscape impacts our economic wellbeing (Florida,

2005, 2010).

23

2.6. Tables and Figures

Figure 2. The Archetypal Masala Movie

Notes: A masala movie combines elements of romance, comedy, action, and drama. As Bollywood matured, this formulaic mixture became the standard and remains the archetypal Bollywood movie to this day. The need to entertainment every section of the crowd, which had limited outside options to begin with, is often cited as playing a major role in the emergence of this class of movies as the dominant and archetypal Bollywood movie.

“…In India, cinema has a completely different use for the audience than it has for a normal Western audience. A normal Western audience, on an average Weekend, can go to a musical, camping, skiing—two hours away, a Broadway, or an off Broadway, or an off-off Broadway play, or can go to a Hollywood film, or an art house film, and he knows that that cinema will have an art house film there. In India, there is nothing. In India, there is only cinema that caters to the mass and there is nothing else.” - Dipankar Banerjee, Director, Bombay Talkies, BBC interview

24

Figure 3. A Jubilee

Notes: In a cinema-loving country with a scarce and inelastic supply of movie screens, the time period for which a movie ran at the theatres determined the commercial success of a movie. In particular, a jubilee, 25 weeks or more in a theatre, developed as the industry standard for categorizing a movie as successful. The screen to population ratio still is one of the lowest in the world in India: 12 Screens per million compared with 117 screens per million in the United States (Dua, 2006).

25

Figure 4. Movie performance

26

Table 1. Film and Non Film Family Directors: Resources and Success

Director Types Proportion Getting Silver Jubilees

Proportion Getting Golden Jubilees

Proportion Collaborating with Top Quintile Actors

Non Film Family Directors (885)

13% 3% 23%

Film Family Directors (99)

36% 19% 57%

Table 2. Correlations between key variables

Number of Weeks Rating Popularity Creativity Number of Weeks 1 Rating 0.2715 1 Popularity 0.4738 0.2197 1 Creativity -0.0273 0.0896 -0.0518 1

27

Chapter 3. Success and Creativity

3.1. Introduction

Creativity, most often defined as the production of novel and useful ideas (Amabile,

1983), has been of interest to scholars across the social sciences. There are many

variations on this popular definition, each of which places different emphasis on, as

examples, the importance of novelty characterized by incremental advances (Houtz et al.,

2003; Mumford & Gustafson, 1988), breakthroughs (Taylor & Greve, 2006), recombination

(Kaplan & Vakili, 2014), and usefulness captured through appropriateness, acceptance,

etc. (Minocha, Stonehouse, & Reynolds, 2014). Despite these variations, most experts

agree that innovation and economic growth are preceded by the creation of novel ideas

and knowledge (Audia & Goncalo, 2007; Kanter, 1988; Romer, 1990; Weitzman, 1998).

Still, by many accounts, our understanding of creativity remains deficient, as does our

comprehension of its management within organizations (Audia & Goncalo, 2007;

Christensen, 1997, 2011; Minocha et al., 2014). This is in large part due to the difficulties

associated with measurement and decomposing the causal impacts of environment,

tenure, lifecycle, and other career events on creativity. The issues in identifying empirical

strategies that can assert causality are further exacerbated by barriers that restrict experts

from pinpointing a mechanism through which creativity is affected. In this study, I use novel

longitudinal data from one of the world’s largest creative industries to identify the causal

impact of a primary determinant of creativity: success (Audia & Goncalo, 2007). I test

alternative hypotheses to pinpoint the mechanism(s) that drive(s) this impact on creativity.

On the one hand, the enhanced access to financial and human resources,

popularity, and experience following success can have a positive impact on creativity. For

instance, in arts, scholars have highlighted the significant role that supporting systemic

inputs such as distribution and exhibition channels play in arts production (Caves, 2000,

2003; Miller & Shamsie, 1999). These systemic resources are often held by a select group

of closely associated individuals. Appropriating those groups’ resources requires a history

28

of embedded exchanges and/or connections within the industry—both of which are

enhanced by success (Lorenzen & Mudambi, 2013; Miller & Shamsie, 1996; Sorenson &

Waguespack, 2006). Furthermore, success in one’s field grants one access to more and

better financial and human inputs. For instance, the most successful scientists are, on

average, the best paid and hold the most significant grants and awards; the most

successful artists are also the most sought after by the elite clique of producers and

financiers (Currah, 2006; Wankhade, 2009). Similarly, academic luminaries attract

significant social capital because of their novel ideas (Azoulay et al., 2010), and successful

artists do the same for their perceived financial appeal (Elberse, 2007). This larger pool of

people, ideas, resources, and diverse heuristics is potentially a fertile setting for more

recombination and the production of novel ideas (Amabile, 1988; Simonton, 2004).

On the other hand, the increase in costs of recombination and exploration and the

relative ease of appropriating rents by exploiting the successful formula can diminish

creativity after success. The exploration-exploitation framework underscores the high

costs of further recombination and exploration once a success formula has been

discovered and implemented (Levinthal & March, 1993; March, 1991). A possible outcome

after achieving success is for the successful individual to steer away from any further

exploration of novel ideas and to demonstrate the proclivity to improve upon (exploit) the

formula for success. This narrow focus on exploiting the optimal solution further reduces

the chances of developing new ideas. Furthermore, in terms of cognitive costs, past

success limits creativity by providing strong exemplars that preclude the generation of

novel and useful ideas (Smith, Ward, & Schumacher, 1993; Ward, 1994). Finally, it is also

possible that motivations other than art, such as maintaining popularity start to affect the

successful individual’s decisions (Amabile, 1997). Therefore, we are left with an empirical

and theoretical puzzle about whether success enhances or diminishes creativity.

In this study, I seek to address this puzzle. To do so, I utilize novel archival data

from Bollywood, one of the largest creative industries in the world, and exploit an

exogenous event of commercial success to identify the causal link between success and

creativity. In doing so, I control the oft-quoted obfuscating factors in such empirical

endeavors. In particular, by employing a difference-in-differences (DD) methodology with

unit- and time-specific fixed effects and unit-specific time trends, I control the prevalent

29

covariates of creativity, such as individual idiosyncrasies (Galenson, 2010), tenure

(Galenson & Weinberg, 1999; Simonton, 1985), and zeitgeist waves (Simonton, 2004a).

My strategy for causal identification hinges on commercial success being a random

conditional upon the controlled covariates. I discuss this identifying assumption in more

detail below.

In my investigation, I employ the notion of a jubilee movie—25 weeks or more at

the box office—in India during the period 1975-1995 to capture commercial success in

Bollywood. A jubilee success captures the two-pronged nature of success in Bollywood: it

represents commercial success as well as peer recognition and validation, as illustrated

by the laudatory and celebratory jubilee ad in Figure 3. Thus, this binary measure of

success allows me to holistically evaluate the impact of success on creativity. I develop a

recombination-based measure of creativity that relies on a departure from the formulaic

and dominant masala genre in Bollywood. I find that outstanding levels of commercial

success—a golden jubilee, i.e. 50 weeks or more—diminishes creativity among Bollywood

directors. More specifically, creativity goes down by a 1/3 standard deviation after a

director achieves a golden jubilee and the decline is more—an additional 2/3 standard

deviation, to be precise—among top directors that do not belong to established film

families. I choose to focus primarily on the non-film family directors because directors

belonging to established film families already possess high levels of popularity and ready

access to resources required for film production and distribution on account of their easier

connection to big stars and producers in the industry. Thus, it is for the non-film family

directors that the jubilee event presumably represents a bigger shock to the creativity and

its driving factors.

Employing similar DD analyses, I test for the mechanism driving this

disproportionate decline in creativity among top non film family directors. In doing so, I find

no support for a commercial success representing a positive shock in access to financial

resources; financial resources seem to be available equally for directors, whether or not

they belong to film families. Moreover, these directors do not have access to higher quality

human capital input after a jubilee; nor is the performance of their subsequent movies

more affected by a jubilee as compared to film family directors. However, the analyses

reveal long term popularity (referred to interchangeably as popularity) as the driving

30

mechanism in determining a director’s creativity: top non-film family directors, the group

that exhibits a disproportionate decline in creativity after commercial success, are found

to be trading off creativity for popularity disproportionately more after a jubilee event. A

jubilee success, by putting the spotlight on these directors, brings popularity and induces

these them to seek more of it. In absence of better access to resources even after

commercial success, these directors are left with only one option to sustain their project-

based careers in this uncertain industry—make movies that are popular among the

masses. Such a strategy involves giving up creativity for formulaic creative production,

since the latter is designed for mass appeal.

Taken together, the results show that neither financial rewards nor access to star

human capital decreases creativity; instead, the quest for long term popularity is

responsible for driving creativity down after success. Top non-film family directors, the

group that exhibits disproportionate declines in creativity after success, capitalize on the

popularity they gain through success and cater to the masses. They achieve this by

making formulaic movies. Their conversion to catering to mass appeal is also in response

to the perceived career risks in project-based creative industries. Follow up interviews with

Bollywood directors confirm the career risk explanation.

This finding has important implications for both practice and policy for the large

creative industries that now play an important role in economies around the world (Flew,

2012; India Brand Equity Foundation, 2013; National Endowment of Arts, 2013) and in

creativity and innovation management within organizations (Amabile, 1997; Amabile,

Conti, Coon, Lazenby, & Herron, 1996). Simply put, a quest for popularity, and fear of

losing the same, drives directors to replicate previous formulas rather than exploring novel

ideas. Policy makers and practitioners alike can put this insight to good use in their

respective fields.

The study also makes significant theoretical contributions. Since the oddities of

creative settings have often led scholars to eschew them as anomalies (Lampel et al.,

2000), developing an economic apparatus best suited for industries where economics and

creativity fundamentally seem at odds has been challenging (Caves, 2000, 2003).

However, understanding competition and strategy in these industries and comprehending

31

the motivations of creative individuals within these organizations (Amabile, 1988, 1997;

Amabile et al., 1996) is becoming increasingly important to economics and management

and scholars as there is currently a focus on individuals and organizations that comprise

the creative class (Florida, 2005, 2010). Furthermore, the issues salient for firms

managing creative talent and output are, in fact, faced by firms in a variety of other

settings. This means that the study of creativity can provide an opportunity to draw

generalizable theoretical insights. This study strives to do just that.

The rest of the chapter proceeds as follows. In the next section (3.2), I review the

extant literature on creativity and develop testable hypotheses. In section 3.3, I describe

the data and empirical identification strategy. Section 3.4 provides the results. Section 3.5

discusses the implications of the results for theory, practice, and policy. Section 3.6 offers

a conclusion to the chapter.

3.2. Theory and Hypotheses: Exploring Success and Creativity

3.2.1. Impact of Success on Creativity

A creative individual produces a mix of outputs. These are either novel or they are

replications of previous work. This behavior in creative production has been documented

in both arts- and science-intensive creative settings (Miller & Shamsie, 2001; Shamsie,

Martin, & Miller, 2009; Simonton, 2004a). Since both sides of the debate about the impact

of success on creativity put forward powerful arguments, it is uncertain whether success

diminishes or enhances creativity, and why it has the impact it does. To think clearly about

these competing forces, let’s assume that creative production entails two broad stages:

choice and outcome. In other words, while creative production certainly requires a decision

regarding project choice (Ferriani et al. 2009), the outcome is a result of many small

improvisations and changes made along the way (for a Bollywood specific discussion, see

Lorenzen & Anderson, 2012). I reason that the competing forces interact at both the choice

and the outcome stages.

32

Arguments that success diminishes creativity dominate at the choice stage.

Scholars maintain that the relative ease and benefit of exploiting a successful formula

rather than launching a risky novel project directs more conservative choices (Caniëls &

Rietzschel, 2015; Levinthal & March, 1993; March, 1991). The narrow focus on exploiting

old ideas inherently limits exposure to a variety of heuristics and creative inputs (i.e.,

people) required for the production of new ideas (Nemeth & Goncalo, 2005; Simonton,

2004a). Psychology literature also points to the constraining effect of past experience in

generating novel ideas (Duncker, 1945; Smith, Ward, & Finke, 1995; Ward, 1994). In

academia, Paul Samuelson famously described the tendency for Nobel prize winners to

become stalled in their pursuits and yet continue to boldly sermonize; he called this the

“Nobel Prize disease.” Audia and Goncalo (2007) provide evidence for this notion:

successful inventors generated more incremental ideas rather than divergent ones,

especially when they worked alone. Still, Kaplan and Vakili (2014) caution against

associating local domain expertise with negative creativity. In their analysis, most

cognitively novel patents—those that led to new streams of investigations—arose from the

scientists’ deep domain expertise.

Additionally, extrinsic motivations can prompt actors to deviate from creativity

(Amabile, 1997); these may include popularity and the need to fulfill the directions of

financiers and gatekeepers who provide other systemic resources. At the individual level,

the artist might experience enhanced popularity and financial payout and want to maintain

it; at the team level, s/he might have to engage, for sake of returns to investment, in

creative production that is more geared toward commercial value. This style of production

is often more formulaic than it is creative. On this subject, Glynn (2000) provides an

example in the Atlanta Symphony. Discordant motivations and goals between artists and

administrators eventually led to musician strikes and a struggle of identities within the

organization. Therefore, although it is possible that a narrow focus and deep expertise can

lead to cognitively novel ideas, the rationales of exploitation, risks of exploration, and

extrinsic motivations and constraints indicate that the creativity diminishing forces might

dominate at the choice stage.

Although success often restricts creativity, as demonstrated above, it can also

enhance creative production and outcomes. It can open new doors for financial and

33

human resources, for example. Successful scientists and artists are rewarded with better

access to more financial and human capital inputs through a variety of reward systems:

scientists are rewarded with patents and copyrights, for instance, while artists may find

greater access to studios, distribution and exhibition channels (Miller & Shamsie, 1996,

1999; Penin, 2005; Shavell & Ypersele, 1999). Moreover, creative individuals are in

demand because of their novel ideas, whether in science or in arts (Azoulay et al., 2010;

Elberse, 2007; Singh & Agrawal, 2011). Thus, success may not only provide access to

resources and opportunities that facilitate further creative activity, whether in arts of

sciences (Azoulay, Ding, & Stuart, 2007; Caves, 2000), but also place people in an

environment where they can interact with leading peers in their field, which in turn has the

potential to prompt them to further recombination and the generation of novel ideas

(Amabile, 1988; Kaplan & Vakili, 2014; Simonton, 2004a). In line with these predictions,

scholars of creativity have shown that while recombination is crucial to the production of

ideas with high economic value (Kaplan & Vakili, 2014), collaboration counteracts the

negative impact of success on creativity (Audia & Goncalo, 2007). The potential of

constraints posed by administrators and financiers notwithstanding, there is strong

rationale and evidence supporting the notion that success enhances creativity at the

outcome stage. In sum, both diminishing rationales exist at the choice as well as the

outcome steps. Taking the above into consideration, I arrive at two competing hypotheses:

H1a: Success enhances creativity.

H1b: Success diminishes creativity.

3.2.2. Possible Mechanisms: Financial & Creative Resources, Subsequent Performance, and Popularity

Much of the argumentation about the impact of success on creativity is based on

the shock to resources and recognition success brings to a creative individual. A shock so

observed modifies the costs and incentives of being creative for an individual, resulting in

a change in relative preference for creativity. In exploring the mechanism behind the

relationship between success and creativity, I presume that the strongest/highest

underlying costs and/or incentives in terms of the shocks will ultimately explain the

rationale for the relationship between success and creativity. With this foundation, I

34

theorize about three oft-quoted immediate shocks: financial resources, human capital, and

subsequent performance and a long term outcome of success—long term popularity over

a career—as possible mechanisms.

First and foremost, success unlocks financial resources. These may take various

forms: direct financial transfers in academe (Nobel, MacArthur Genius Grants etc.);

commercialization in academe and industry (Collins, 2002; Shane, 2004); awards and

contracts in arts (Delmestri et al., 2005; Elberse, 2007; Ganti, 2012); and a general

increase in demand for superstars (Azoulay et al., 2010; Basuroy, Chatterjee, & Ravid,

2003; Singh & Agrawal, 2011). These are the well-established financial advantages of

being commercially and/or creatively successful. Befitting of superstars with a large fan

following, successful stars in creative industries exercise considerable clout (Elberse,

2007); all the supporting resources, concentrated within a small group of individuals,

become available to them (Currah, 2006; Wankhade, 2009). Across disciplines and

organizational forms, there is evidence that success attracts financial inputs for the artists

and their future endeavors. Such increase in financial availability can either catalyze more

creativity, when incentives encourage the inventor or the artist to engage in more

creativity, or result in the use of financial resources to further exploit previous ideas—a

question this study explores. Nevertheless, I reason that a plausible underlying

mechanism influencing creativity following success is the general increase in availability

of financial inputs for future projects.

Second, success generates significant membership changes in creative industries.

The best-in-field creative activity tends to be concentrated among a select few individuals,

and success in respective domains pushes individuals into the exclusive peer group.

Literature is replete with examples of successful collaborators (Fleming et al., 2007),

group/cluster formation (Agrawal, Kapur, & McHale, 2007; Simonton, 2004b), and the

disproportionate output and resource appropriation by a small fraction of the population

(Agrawal et al., 2014; Currah, 2006; Rosen, 1981; Wankhade, 2009). Therefore, creative

success provides access to the domain’s elite, which in turn permits artists to further

catalyze creativity through their exposure to higher quality and more diverse heuristics

and knowledge (Nemeth, 1995; Nemeth & Goncalo, 2005). Furthermore, the

enhancement in social capital also unlocks systemic resources such as exhibition and

35

distribution channels that facilitate large-scale creative production (Miller & Shamsie,

1996, 1999). One possibility in this scenario if of a positive impact on artists’ creativity

when they have enhanced access to top creative peers because of the opportunity it gives

them to increase their exposure to recombination of ideas. However, it is also possible

that success leads to exposure to stars who are themselves motivated to exploit their

previously successful ideas—a case where increased access to creative inputs would not

lead to an increase in creativity after success. I remain open to both these possibilities;

overall, I expect that success does increase access to the most important raw material for

creativity: people who have excelled in their respective domains.

Third, success can inspire higher subsequent performance. In project-based

creative industries, artists and scientists alike, once finished with one project proceed to

the next art piece, experiment, patent, etc. Being successful in patenting, for instance, can

spark further high performance measured by the number of future patents granted (Audia

& Goncalo, 2007), patent citations, or even new breakthrough (Kaplan & Vakili, 2014).

Similarly, creative professionals in the arts often produce their most successful works in

clusters (Galenson, 2010). Finally, there is the possibility that creative professionals

engage in less divergent and more exploitative production after success (Audia &

Goncalo, 2007)—enhancing the chances of high performance. Therefore, on the whole,

there is evidence that achieving commercial success can provide a template that can be

replicated. Theoretically, the exploration-exploitation framework (March, 1991) supports

this result: It is much easier and less risky to exploit an established successful formula

than to explore new ones. Therefore, overall, I expect higher subsequent performance

following the initial success.

Fourth, success inevitably brings people in the spotlight. In cinema, stars are

followed as superhuman idols (Elberse, 2007), and their brand image is imprinted on the

public (Lorenzen & Täube, 2008). Successful academics (e.g., Nobel Laureates, CEOs,

and inventors) are also closely followed, publicly recognized, and praised for their

achievements and those of their companies (e.g., Elliott, 2012; Malmendier & Tate, 2009).

This enhanced popularity affects creative and commercial reception of future products

(Delmestri et al., 2005; Soda et al., 2004); it also facilitates interaction with key

complements within the industry. However, the popularity following success may be

36

fleeting. But success does offer opportunities for the creative individual to maintain this

heightened level of popularity by exploiting established formulas. Therefore, the creative

reaction to success might be significantly affected by the individual’s preference for long-

term popularity. Scholars of creativity have previously pointed out that extrinsic

motivations, such as popularity, can affect motivations of creative individuals (Amabile,

1997). Therefore, I expect that it is possible for creativity to be sacrificed for sake of

popularity. In other words, heightened level of popularity following success can lead to

further popularity seeking. In sum, these considerations lead me to the second set of

mechanism hypotheses:

H2: There is an increase in availability of financial resources (budget) after success.

H3: There is an increase in the availability of human resources (stars) after success.

H4: Initial success leads to higher levels of subsequent performance.

H5: There is an increase in popularity seeking after success.

3.3. Data and Empirical Framework

3.3.1. Data Collection

The data collection started with interviews. I conducted several semi-structured

interviews with actors, producers, distributors and people involved in several other

departments of movie making in Bollywood. I then collected movie data from the Internet

Movie Database (IMDB). I also compiled success information from the archives of Trade

Guide magazine at National Film Archive of India (NFAI), in Pune, India, and demographic

information from the Internet. From IMDB, I collected data on the entire population of

movies produced in Bollywood (about 10,000) between 1930 and 2014, as well as

information on their cast, crew, and genres. I added the data I collected from NFAI and

the web to this information to prepare the comprehensive dataset used for analysis. In the

remainder of this section, I describe the operationalization of my variables of interest and

how only a portion of the dataset is used in the analysis below due to data and internal

validity constraints.

37

3.3.2. Variables of Interest

One of the biggest challenges in studying creativity is measuring it (Amabile,

1982). Different approaches to measuring creativity abound in the literature. For instance:

behaviorists measure it as the characteristics of creative individuals and their creative

processes (Caniëls & Rietzschel, 2015); other scholars have relied on the usefulness and

novelty of the product as judged by peers (von Nordenflycht, 2007); yet others have

resorted to quantifying the impact the creative product has had over time (Galenson,

2010). Despite the disparate means of measurement, the notion of recombination and the

generation of novel ideas remain at the heart of creativity. Kaplan and Vakili (2014), as an

example, use a topic modelling approach to identify novel topics resulting from either deep

expertise or technologically diverse recombination. Similarly, Audia and Goncalo (2007)

measure creativity by the generation of new patent subclasses. While the outcomes and

impact-based measures of creativity effectively capture the utility dimension of creative

product, there is some merit to measuring creativity at the ‘front end,’ using the product

characteristics and, to some extent, the nature of the choice made by the individual.

My setting allows me to develop a novel and unique measure of creativity:

Acknowledging the diverse approaches to evaluating creativity, I measure it by building

on the cornerstones of the generation of creative ideas, i.e., recombination of ideas

(Kaplan & Vakili, 2014) and divergence from the standard formula (Audia & Goncalo,

2007). I use deviation from the elements of the masala genre—action, comedy, drama,

and romance—as my measure of creativity. In particular, in a 19-dimensional space of

genre categorizations, I calculate the Euclidean distance of the genre categorization of a

movie from the categorization of a typical masala movie with all the four elements. A movie

usually has 2-3 genre tags. If all of those genres are one of the 4 masala genres, the

Euclidean distance measure is 0, indicating that the movie is completely formulaic.

However, if a movie has a genre tag outside the masala genres (e.g., history) or only has

one genre tag (e.g., action), the movie is further away from a formulaic masala genre

movie and the distance measure is positive and higher. As masala elements are discarded

or replaced by non-masala genres, the measure yields high values. Formally, the

Euclidean distance is defined as:

38

�(𝐺𝐺𝑅𝑅𝑅𝑅𝑅𝑅𝑅𝑅𝑅𝑅𝑅𝑅𝑅𝑅 − 1)2 + �𝐺𝐺𝐶𝐶𝑅𝑅𝑅𝑅𝑅𝑅𝐶𝐶𝐶𝐶 − 1�2 + (𝐺𝐺𝐷𝐷𝐷𝐷𝑅𝑅𝑅𝑅𝑅𝑅 − 1)2 + (𝐺𝐺𝐴𝐴𝑅𝑅𝐴𝐴𝐴𝐴𝑅𝑅𝑅𝑅 − 1)2 + (𝐺𝐺𝐶𝐶𝐷𝐷𝐴𝐴𝑅𝑅𝑅𝑅 − 0)2 + ⋯+ �𝐺𝐺𝐻𝐻𝐴𝐴𝐻𝐻𝐴𝐴𝑅𝑅𝐷𝐷𝐶𝐶 − 0�2

In an environment, when the predominant cinema contains elements of masala

movies, making movies that delve into different subject matter and themes, as captured

by genre classifications, is recombinant as well as divergent. The Euclidian distance

measure captures these elements of divergence and recombination. I normalize this

measure for all further analysis. In addition, I also adopt a binary indicator for creativity.

This indicator is operational when a movie has genre categorizations outside of the 4

masala genres.

For commercial success—a notoriously difficult variable to operationalize in the

context of Bollywood—I depart from the oft-used box office revenue figures as a measure.

I do so for two primary reasons: 1) the lack of consistency and credibility of box office

figures in Bollywood (to this day, Bollywood does not have a centralized system of

reporting box office earnings); and, 2) the availability of a better measure that allows for a

research design that facilitates causal identification. Categorizing movies as silver, golden

and other jubilees is, in fact, the differentiating feature of Bollywood that allows me to

perform the analyses that may not be possible in other motion picture industries such as

Hollywood. Therefore, although slightly limiting in terms of data (as explained below, I

focus on the jubilee between 1975 and 1995 only), I use a jubilee movie to gauge

commercial success; it is operationalized as an indicator variable representing whether a

movie was a jubilee success or not. In particular, while several variations of the jubilee are

available, I use golden jubilee—50 weeks or more at a theatre, an exception level of

success—as a measure of success and as my treatment variable.

To reiterate, in post-independence India, movies were released only in a handful

of prints all over the country. Therefore a method of judging movie success developed

around the number of weeks a movie ran in theatres. Movies that ran longer, of course,

were considered more successful. The idea cemented its place among the industry

experts, and slowly, vernacular such as silver jubilee and golden jubilee (and others)

became standard parlance for all movie-going Indians. Though the number of screens in

India per person is still very low (Ganti, 2012), this standard of calling movies either silver

and golden jubilee hits became obsolete after the arrival of multiplexes—malls with

39

American-style multiple-screen theatre halls (Ganti, 2014). Though the first multiplex has

been in operation since 1997, it wasn’t until the 2000s that watching movies in a multiplex

became the norm. By some accounts, the screen to population ratio in India was still one

of the lowest in the world in 2006: 12 screens per million compared to 117 screens per

million in the United States (Dua, 2006). Since 2000, the integration of multiplexes in the

urban Indian culture has meant that movies no longer needed to run 25/50 weeks to be

considered a commercial success. In fact, much like Hollywood movies, Bollywood movies

now generate most of their revenue in the opening weekend. Therefore, I only use the

jubilee movie as a measure before the multiplex era. To ensure that I do not make

inferences from data that lack internal validity, I stop in 1995, about 5 years before the

multiplex phenomenon became a vogue in the country. Based on conversations with

industry experts and the literature on multiplexes, I reason that the silver jubilee and

golden jubilee classification holds ground until the end of 1995. However, I do include the

movies made by the directors in this sample until the year 2014 so that I have complete

information on creativity.

In Table 3, I summarize the key mechanisms variables, with their

operationalization, role in the study, and sources. I measure financial resource availability

and budget for future projects of a director by using the count of the cast and crew

members for each movie. This is a modification of previous usage of similar measures

that have been used to operationalize the magnitude the social capital in the team (Soda

et al., 2004). Bigger budget movies invariably tend to be better documented on IMDB,

which in turn leads to larger casts and crew also being reported on IMDB. Thus, I reason

that this measure of financial resource availability is credible for Bollywood. For availability

of human capital inputs and to measure quality of the team, i.e., human capital, I follow

previous literature that employs cumulative performance of artists and use the cumulative

theatre-weeks of lead actors (Ferriani et al., 2009). This measure comprises the total

number of weeks a lead actor’s movies have run in theatres and reflects the extent of a

lead actor’s cumulative success and star power, i.e., it is indicative of the quality of human

capita a director employs. I develop a similar theatre-week measure for the directors in

order to calculate their pre-jubilee status relative to their peers. I code an indicator variable

to denote directors in the top quintile. This variable is ‘on’ for top quintile directors who do

40

not belong to established film dynasties in Bollywood. Finally, I use the cumulative number

of votes from IMDB as a measure of popularity of a movie.

3.3.3. Identification Strategy

The ideal experiment for addressing the question of whether commercial success

diminishes creativity would involve randomly selecting directors for commercial windfalls

and observing the before-after difference in levels of creativity in directors receiving and

not receiving success treatment. To mimic this experimental ideal, I employ difference-in-

differences (DD) estimations (Angrist & Pischke, 2008). I consider the post-jubilee positive

shock to resource sets tested in the mechanism hypotheses (H2-H5), as my treatment

variable. The underlying identification assumption of my analysis is that, conditional upon

the observed covariates, a jubilee event is as good as randomly assigned (formally,

uncorrelated with the error term). While I discuss the threats to this assumption later, the

assumption seems reasonable given the covariates I control for and the nature of the

creative industries, where nobody knows if the creative product will appeal to the masses

(Caves, 2000; Goldman, 1989). An alternative to DD identification strategy in this case

could be a regression discontinuity (RD) design. The number of weeks supplies us with

running variables, and the jubilee determination is deterministic, providing us with a

situation seemingly amenable to a sharp RD (Angrist & Pischke, 2008). However, because

of the ease of implementation and the fact that unit-specific fixed effects make matching

redundant, I chose to implement the DD identification strategy. Further, non-linearity

checks and investigations around the cut-off observations can be circumvented using DD

analyses with the required controls. Still, it is fathomable that a researcher could

implement an RD design in this scenario, with the necessary checks, and perhaps fit a

model very similar to the one I estimate in my DD analyses:

𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝑦𝑦𝐴𝐴𝐴𝐴 = 𝛼𝛼 + 𝛽𝛽 ∗ 𝐽𝐽𝐽𝐽𝐽𝐽𝐶𝐶𝐽𝐽𝐶𝐶𝐶𝐶𝐴𝐴𝐴𝐴 + 𝛾𝛾𝐶𝐶 + 𝜆𝜆𝐴𝐴 + 𝛾𝛾𝐶𝐶 ∗ 𝐶𝐶 + 𝐶𝐶𝐴𝐴𝐴𝐴

In this equation, 𝛾𝛾𝐶𝐶 , 𝜆𝜆𝐴𝐴 and 𝛾𝛾𝐶𝐶 ∗ 𝐶𝐶 are director-fixed effects, time-fixed effects, and

director-specific time trends, respectively. Of 984 directors in the sample, 48 are jubilee

directors; the non-jubilee directors act as control directors. The time dummies and director-

fixed effects subsume the traditional post-treatment and treated cross-sectional unit

41

coefficients, respectively. Since the data is structured as a panel, I run panel data

estimations with robust standard errors clustered at the director level. To unpack the

differences in creativity post-jubilee in directors with different levels of prior experience

and success, I also run the following DD estimation:

𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝑦𝑦𝐴𝐴𝐴𝐴 = 𝛼𝛼 + 𝛽𝛽1 ∗ 𝐽𝐽𝐽𝐽𝐽𝐽𝐶𝐶𝐽𝐽𝐶𝐶𝐶𝐶𝐴𝐴𝐴𝐴 + 𝛽𝛽2 ∗ 𝜙𝜙𝐶𝐶 + 𝛿𝛿(𝐽𝐽𝐽𝐽𝐽𝐽𝐶𝐶𝐽𝐽𝐶𝐶𝐶𝐶𝐴𝐴𝐴𝐴 ∗ 𝜙𝜙𝐶𝐶) + 𝜆𝜆𝐴𝐴 + 𝛾𝛾𝐶𝐶 ∗ 𝐶𝐶 + 𝐶𝐶𝐴𝐴𝐴𝐴

In this specification, 𝜙𝜙𝐶𝐶 captures top director effects while 𝛿𝛿 represents the DD

parameter. As a part of initial exploratory analyses, I also estimate the main specification

with a full set of lead and lag event-time dummies, which represent the movies made

before and after a jubilee event for the focal director:

𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝑦𝑦𝐴𝐴𝐴𝐴 = 𝛼𝛼 + 𝛽𝛽−𝑅𝑅 ∗ 𝐽𝐽𝐽𝐽𝐽𝐽𝐶𝐶𝐽𝐽𝐶𝐶𝐶𝐶𝐴𝐴𝐴𝐴−𝑅𝑅 + 𝛽𝛽−𝑅𝑅+1 ∗ 𝐽𝐽𝐽𝐽𝐽𝐽𝐶𝐶𝐽𝐽𝐶𝐶𝐶𝐶𝐴𝐴𝐴𝐴−𝑅𝑅+1 + ⋯+ 𝛽𝛽−1 ∗ 𝐽𝐽𝐽𝐽𝐽𝐽𝐶𝐶𝐽𝐽𝐶𝐶𝐶𝐶𝐴𝐴𝐴𝐴−1 + 𝛽𝛽1∗ 𝐽𝐽𝐽𝐽𝐽𝐽𝐶𝐶𝐽𝐽𝐶𝐶𝐶𝐶𝐴𝐴𝐴𝐴+1 + ⋯+ 𝛽𝛽𝑘𝑘 ∗ 𝐽𝐽𝐽𝐽𝐽𝐽𝐶𝐶𝐽𝐽𝐶𝐶𝐶𝐶𝐴𝐴𝐴𝐴+𝑘𝑘 + 𝛾𝛾𝐶𝐶 + 𝜆𝜆𝐴𝐴 + 𝛾𝛾𝐶𝐶 ∗ 𝐶𝐶 + 𝐶𝐶𝐴𝐴𝐴𝐴

In this formula, 𝐽𝐽𝐽𝐽𝐽𝐽𝐶𝐶𝐽𝐽𝐶𝐶𝐶𝐶𝐴𝐴𝐴𝐴−𝑅𝑅 is set to 1 for n movies prior to a jubilee movie, and 0

otherwise. Similarly, 𝐽𝐽𝐽𝐽𝐽𝐽𝐶𝐶𝐽𝐽𝐶𝐶𝐶𝐶𝐴𝐴𝐴𝐴+𝑘𝑘 is set to 1 for all k movies after the attainment of a jubilee,

and 0 otherwise. Here, for any director 𝐶𝐶, 𝑛𝑛 ∈ 𝑁𝑁𝐴𝐴 & 𝑘𝑘 ∈ 𝐾𝐾𝐴𝐴 , where 𝑁𝑁 and 𝐾𝐾 are the number

of movies before and after a jubilee movie for the director; 𝑛𝑛 and 𝑘𝑘 increase as I move

away from the jubilee event in either direction. The omitted category is the movie event

where the director achieves a jubilee. 𝛾𝛾𝐶𝐶 , 𝜆𝜆𝐴𝐴 and 𝛾𝛾𝐶𝐶 ∗ 𝐶𝐶 represent director, time, and

director-specific time effects, respectively. While the leading indicators, help discern the

extent to which reverse-causality influences our coefficients—that is, while they help to

determine whether creative film making influences the likelihood of a jubilee event—the

lagged indicators allow us to explore temporal dynamics, in particular the duration of the

jubilee effect. To elaborate, statistically significant coefficients on the leads would indicate

that directors are systematically being more or less creative to achieve a jubilee while

statistically significant coefficients on the more distant lags would indicate that the impact

of a jubilee is persistent.

3.3.4. Threats to Identification

The identifying assumption in the DD methodology described above is that the

golden jubilee event is uncorrelated with the error term, conditional upon the controls. In

42

other words, there is no common shock to jubilee and creativity for a particular director.

For instance, if there were a common positive shock to a director’s creative production

and movies in terms of financial performance (leading to a jubilee), it would lead to higher

levels of creativity in a director’s movies regardless of a jubilee treatment. In this scenario,

the impact of jubilee on creativity would be inflated. The results presented incorporate year

fixed effects, director-specific time trends, to control for any time-specific shocks, both

director-specific as the one mentioned above, and in general. A possible source of threat

could be lead actors, who are known to determine financial success in the movie industry

and to collaborate with their favorite directors. Said alternatively, directors also tend to

have their favorite lead actors. Thus, if directors were systematically being creative, hiring

certain actors, and achieving jubilee success, they would pose a threat to our identification

strategy. Then post-jubilee, if they were systematically collaborating with actors who

influenced them into formulaic movie making—either to reinforce or dominate the creative

proclivities of directors—this would hinder my analysis. However, in talking to Bollywood

directors, I find that while film scenes and sequences get improvised and modified to

accommodate the star power of major celebrities, the overall creative thrust comes from

the director. Thus, this alternative explanation, though plausible, is not very likely.

Furthermore, if jubilees come systematically to creative movies, our identification

assumption is violated. However, audience reaction varies with time, and jubilee movies

have high variance in creativity. It is also possible that the jubilee events can be

accompanied by unobserved zeitgeists. However, I control for such waves using year

effects and also do robustness checks using longer time-fixed effects, the results do not

change. Overall, conditioning my treatment upon time- and director-fixed effects and

director-specific time trends, coupled with the inherent uncertainty in the movie industry,

makes the assumption that a jubilee hit is random for a director reasonable.

3.4. Results

3.4.1. Preliminary Evidence for the Intuition

First, I present results of some preliminary investigations on the impact of success

on creativity. In particular, I graph the point estimates of creativity regressed on leads and

43

lags of movie sequence dummies for all directors. The corresponding graph is presented

in Figure 5. As evident in Figure 5, preliminary event study analysis suggests that

commercial success diminishes creativity. In other words, a golden jubilee seems to have

a negative impact on creativity. Furthermore, Table 4 presents the binary mean

comparisons of creativity before and after a golden jubilee. A drop from 73% to 59%,

compared with a rise from 52% to 59%, points to the higher decrease in creativity among

directors who attain a jubilee. Tables 5 and 6 present the summary and other key statistics.

3.4.2. Commercial Success Diminishes Creativity

Table 7 presents the results of the estimation, with time- and director-fixed effects,

director-specific time trends, and movie sequence dummies with golden jubilee as the

treatment. The coefficient on the post golden jubilee dummy is negative and significant for

the initial as well as the full regression. This result suggests that attaining exceptional

commercial success—golden jubilee—does diminish creativity among all directors. On

average, a golden jubilee decreases creativity in a movie by 0.37 standard deviations. In

particular, the coefficients on the indicator for movies post-jubilee range from -0.40 to -

0.34. More concretely, a director exhibiting about average levels of creativity is likely to go

down by 14 percentile points compared to his/her peers after attaining a golden jubilee.

3.4.3. Commercial Success Diminishes Creativity More in Top Non Family Directors

Negative point estimates of similar magnitude persist for DD estimations for top

non-film family directors, i.e., directors in the top quintile in terms of commercial success

who do not have any links to film families (Table 8). These corroborate the negative impact

of a golden jubilee hit. Furthermore, these DD estimations also demonstrate that creativity

goes down disproportionately more for top non-film family directors after a golden jubilee

than it does for the rest. In fact, the impact for this group is 2/3 standard deviation more, -

0.662, than the overall decline in creativity. In other words, a top non-film family director’s

creativity goes down by 2/3 standard deviations more compared to other directors after a

golden jubilee; and, if s/he is exhibiting about average levels of creativity, they are likely

44

to go down 25 percentile points in creativity after a golden jubilee. Figure 6 captures this

enhanced decrease in creativity among top non-family directors in an event study graph.

3.4.4. Mechanism I: Impact of Success on Financial Resources

In exploring the mechanism behind the diminished creativity after a jubilee, I

proposed financial resources, stars, and popularity as three potential drivers. Table 9

presents preliminary visual evidence for a significant positive shock in all these parameters

after a jubilee. It presents the mean comparisons for the four mechanism-dependent

variables—financial resources, creative inputs, subsequent performance, and

popularity—before and after a jubilee. While the increase in financial resources for jubilee

directors is marginal, the increase in access to creative input, subsequent performance,

and popularity seems significant. The second set of regressions delves deeper and strives

to explore the mechanism behind the observed decrease in creativity after a golden

jubilee.

The first phase in dissecting our results involves examining the change in financial

resources for directors who achieve a golden jubilee hit. I surmised that access to financial

resources goes up after a jubilee hit. For the proposed effect to be true, I should find that

top non-family jubilee directors have larger budgets after attaining a jubilee hit. The

statistically insignificant results (presented in Table 10) do not corroborate our hypothesis

that access to financial resources increases after a golden jubilee event (coefficients:

5.848, 4.361, 7.861). Therefore, I cannot conclude that the movie budget increases after

a jubilee event, and consequently I must rule out the financial shock explanation for the

decrease in creativity.

3.4.5. Mechanism II: Impact of Success of Access to Human Capital (Stars)

I hypothesized that the jubilee hit increases access to financial capital and at the

same time enhances access to human capital inputs such as big stars. For this to be true,

I should also find that jubilee directors are collaborating with bigger stars after achieving

a jubilee. For these investigations, the dependent variable operationalizes superstars by

the cumulative number of weeks his/her movies have run at the movie theatres until a

45

golden jubilee event. The coefficients of the resulting estimation for top non-family

directors (presented in Table 11) are significant, but in the opposite direction (-230.5, -

253.5, and -243.1), as they suggest that golden jubilee events do not lead to collaborations

with bigger stars but rather disproportionately decrease the access to stars for top non-

film family directors. More specifically, for top non-family directors, on average, the fall in

theatre-weeks of lead stars is about 240 weeks more, relative to the change in other

directors.

3.4.6. Mechanism III: Impact of Success on Subsequent Performance

I hypothesized that the jubilee hit increases subsequent performance for directors.

The results, presented in Table 12, do not provide support for this conjecture. A

disproportionate increase in creativity for top non-family directors does not coincide with

a disproportionate increase in subsequent performance for top non-family directors. The

dependent variable here is the number of weeks for movies made after attaining a golden

jubilee. The coefficients of the resulting estimation (presented in Table 12) are not

statistically significant (11.36, -5.136, and -1.493); they suggest that a golden jubilee does

not disproportionately increases the subsequent performance of top non-family directors

compared to family and non-family directors outside of the top quintile.

3.4.7. Mechanism III: Impact of Success on Popularity

I hypothesized that the jubilee hit increases popularity seeking for directors. In

addition to Table 9, which provided eyeball evidence for this claim, DD regression results

presented in Table 13 corroborate this hypothesis. Figure 7 plots the point estimates of

the interaction term between top non-family directors and popularity for a movie for the

leads and lags surrounding a golden jubilee event. The results provide further support for

the conjecture that the disproportionate increase in popularity seeking among top non-

family directors could be causing the disproportionate decrease in creativity for top non-

family directors. The dependent variable here is the number of votes for a movie on IMDB.

The coefficients of the resulting estimation (presented in Table 13) are both positive and

significant (703.4, 794.3, and 999.3); they suggest that after a golden jubilee, top non-

46

family directors exhibit disproportionately high levels popularity compared to family and

non-family directors outside of the top quintile.

3.5. Discussion

3.5.1. Contributions

I started this chapter with the goal of investigating whether success diminishes

creativity. Moreover, I aimed to consider the mechanisms that drive such behavior, if

success does indeed diminish creativity. I find that commercial success does diminish

creativity in Bollywood directors, leading artists in one of the world’s biggest creative

industries. In particular, the effect is disproportionate and significant for top directors

without any links to established film dynasties/families; these are the directors who

experience the biggest shock in terms of popularity and choose to give up creativity for

formulaic creative production in order to maintain their popularity. Furthermore, I rule out

the increase in financial and human capital and subsequent movie performance as factors

that diminish creativity disproportionately among top non-family directors. I focused

primarily on the top non-film family directors because directors belonging to film families

already possess high levels of resource access and popularity. Thus, the jubilee event

presents bigger shock to the creativity and its driving factors for the non-film family

directors.

In the process, I make three distinct contributions to the literature of creativity. First,

I introduce a measure for creativity to a field that has found doing so to be a fundamental

hurdle (Amabile, 1983). Though the measure is specific to Bollywood, the study

encourages identifying of settings where novelty is nestled in a homogeneous context, just

as experimenting with new genres existed in a background dominated by masala genre.

Future creativity measures can leverage such contexts to define and measure creativity

in new ways. I also introduce a binary measure of commercial success in the movie

industries, where considerable heterogeneity in commercial performance is a concern in

analysis. Again, this treatment-like measure of success is a unique feature of Bollywood,

but similar approaches can be employed elsewhere.

47

Second, using a DD identification strategy in a creative industry, I move toward an

answer to the question of whether success breeds/diminishes creativity and if so, why. I

am able to rule out other oft-quoted explanations such as financial and human capital

inputs as possible mechanisms affecting creativity post-success and ascertain the

enhancement and the quest to maintain popularity as the underlying mechanism.

Third, I use a causal identification strategy to explicate the value proposition of

commercial success for artists. More specifically, I add nuance to the benefits of

commercial success in the motion picture industry: overall, commercial success does not

facilitate access to stars or more financial resources, but rather brings forth popularity and

enables directors to enhance the same. Therefore, commercial success doesn’t level the

playing field for artists. If anything, creative individuals without connections to established

gatekeepers (film families in the case of Bollywood) exhibit significantly and

disproportionately lower levels of creativity post-success because of the fear of losing the

popularity after being successful. In my follow up interviews, Bollywood directors and

actors provided confirmation that the fleeting nature of popularity drives directors to be

less creative in order to appeal to the masses. One assistant director observed: “I am

afraid of making movies; I don’t want to be the guy who made one movie—might even be

a hit—but then nothing after.” Another pointed out that, “A hit basically buys you 2-3 more

projects.” An actor whom I interviewed added that directors without links to families simply

“are not there yet;” in other words, they are not yet in a place to be more creative and

experimental.

The results offer an explanation to the question of balancing creativity and success

(Audia & Goncalo, 2007; Caves, 2000, 2003; Voss, Cable, & Voss, 2000). They also

confirm the findings highlighting the benefits of networks and embedded exchange in

creative industries (Ferriani et al., 2009; Sorenson & Waguespack, 2006). Additionally,

they provide further evidence of category spanning discounts not just in terms of

performance but also of popularity (Hsu, 2006; Zuckerman, 1999). Artists that are not

connected to established gatekeepers do not experience a shock in financial or human

resources even after a commercial success. As one director explained, “Basically, stars

have a group of people they work with—in rotation. First it’s A, then B, and if C is sick, it’s

D and so on.” Therefore, stars only end up working with people they know and who have

48

a track record of success and/or have built a family brand (Lorenzen & Täube, 2008),

resulting in an obvious disadvantage for directors who do not belong to film families. As a

result, these directors resort to the only means of prolonging and safeguarding their

creative careers: catering to the masses. They do so by making movies that are more

likely to have a high popular appeal, which unavoidably encourages formulaic creative

products and inhibits novel expression.

In terms of policy, the results make a case against lump sum public funding for

artists and arts organizations. Currently, a vast majority of American states and nations

around the world provide funding to arts organizations. However, the results indicate that

the availability of funds to artists and arts organizations may not be of much significance.

To enhance creativity in the arts, the right segment of creative entrepreneurs need to be

ensured of recognition. Thus, policy makers looking to build creative communities (Flew,

2012) or making policy decisions for urban spaces (Scott, 2006) should find the results of

this study useful. For practice, research in economics and organizational psychology

strongly links creativity with innovation (Amabile, 1988; Galenson, 2010) and leadership

(Khaire & Amabile, 2008);with the results from the study, we are now in a position to better

draw managerial insights from the study. To begin, managers and leaders need, during

problem solving, to recognize and utilize the complementarity of financial incentives and

that of long-term popularity or recognition for members within their departments and

working teams for better team performance. Furthermore, innovation management

through key influencers at group and organizational levels can pave the way for creative

advantage within organizations (Minocha et al., 2014); lessons from the current study

indicate that identifying influential individuals within groups and units and empowering

them might be one way to sustain creativity in problem solving and leadership within

organizations (Watson, 2007).

3.5.2. A Layperson’s Explanation

The results show that the relative preference between creative and masala movies

changes for high performing, non-film family directors. In other words, after achieving a

jubilee, these directors systematically prefer to make masala movies, with high probability

of being popular, rather than creative ones. Doing so ensures that these directors still

49

accumulate significant long-term popularity even though they might fail in terms of

creativity and/or performance contemporaneously. There is possibly an economic as well

as a psychological explanation for what I observe. I can view this process as a two-step

game that directors play. In the first step, non-film family directors try to attract attention in

a crowded field of directors. Since anyone can make a masala movie, being conspicuous

requires making creative movies at this stage. However, once they have achieved

success, they do not need to stand out. Therefore, they can switch to making masala

movies, which have higher probability to being commercially successful and appeal to a

larger audience. Alternatively, one can imagine that before a jubilee, a director has never

experienced the kind of popularity that accompanies being a hit director. This level of

popularity brings with it perks such as celebratory parties, access to financiers, and future

potential projects. Once one is accustomed to these perks of stardom, one can imagine

these directors not willing to surrender it, but instead wanting more of it.

I perform some before-and-after comparisons of bivariate correlations to further

explore the reality these top non-film family directors face (see Table 14). The results

reveal that, for this segment of directors, creativity is negatively correlated with both

performance and popularity—but at different periods. It turns out, not surprisingly, that

creativity is not negatively correlated with popularity before achieving a jubilee, but only

afterwards. This makes intuitive sense because these directors are hardly known before

a jubilee to begin with so making creative movie has no downside for their popularity

before a jubilee. However, being creative is negatively correlated with popularity post-

jubilee, thus incentivizing these directors to make formulaic movies. Furthermore, in this

stage I do not see a high correlation for creativity and performance. In other words, after

achieving a jubilee, top non-family directors can be creative without much negative impact

to movie performance, but they are not—because they don’t want to withstand declines in

the popularity that accompanies creative movie making. Together, the results seem to

support both the economic and psychological explanations. In the first stage, looking for

the spotlight, these directors are creative despite the downside to performance. However,

once in the limelight, the same directors choose to be formulaic, even though the market

doesn’t penalize them in terms of performance for being creative, because they want to

maintain their level of popularity. Overall, these directors seem to be driven by popularity

both before and after a jubilee.

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3.5.3. Future Research

Like any other study, this study has several limitations, which can be addressed

by future research. The chapter investigates the impact of success on creativity, utilizing

industry-specific institutional knowledge in a film industry. I reason that the results might

be generalizable to some but not all creative industries. For instance, the results lend

themselves well to contexts where success is binary. Therefore, caution must be

exercised while drawing conclusions about other creative industries, and more research

in different contexts should be conducted to strengthen the findings presented here.

Furthermore, several puzzles in creative industries still abound. Natural extensions of this

chapter would also be a deeper analysis into the unique tradeoffs present in creative

industries, including: market construction versus catering to the market (Wijnberg &

Gemser, 2000); vertical versus flexible organizational structure (Mezias & Mezias, 2000);

and individual versus team creative systems (Starkey et al., 2000). Furthermore, the

question of what else success could affect also remains. It is possible that it is not just

creativity of a director that is affected by jubilee success; there are many other factors

such as quality of work that could be considered. I hope that this study provides the

impetus for strategy and entrepreneurship scholars to pursue some of these interesting

research avenues.

The study offers a few counterintuitive findings as well. First, it finds that

commercial success has no impact on budget. I reason that this result is worth further

exploration. It cannot be ruled out that my measure for budget—team size—captures the

budget crudely: In particular, it is possible that after a jubilee, a director has access to

better tools/technology that allows more expensive, yet more efficient productions

requiring fewer team members. It is alternatively possible that using bigger stars

necessarily means having a higher budget for those actors and a lower remaining budget

for a bigger supporting cast. This would result in a systematic error in operationalization

of access to capital. Alternatively, it is also plausible that financial capital is generally

available, albeit at high interests, and hence I do not see any effect on budget after a

jubilee. Regardless, the puzzle demands a further exploration of Bollywood’s budgets and

star contracts, which have recently exhibited considerable heterogeneity.

51

Second, this study finds that top directors who do not belong to film families work

with stars with disproportionately fewer weeks of success to their name after attaining

success. This finding is also puzzling in that one would expect success to increase access

to major celebrities. It is possible that it does so, but the fact that major celebrities choose

to work with successful film family directors impedes the opportunities for directors without

family connections to cast them. This dynamic of resource blocking is worth further study.

This study also has only scratched the surface of corporate governance

implications; there is the potential for future researchers to build on previous research on

creative industries and ownership (von Nordenflycht, 2007) by combining it with the

insights presented here. Lastly, as studies investigating the impact of regulation on

creative industries are scant (e.g., Singh & House, 2010), more work needs to be done on

the impact of policy on creative production. Bollywood and other large entertainment

industries offer a fitting setting for such analyses. I hope that scholars will see and embark

upon these future research opportunities with the same passion that I do. We also stand

to gain—both academically and in practice—from these endeavors.

3.6. Conclusion

In this chapter, I explored how achieving success affects creativity, using the

setting of Bollywood. The empirical evidence causally asserts that creativity decreases

after success, and does so disproportionately among artists who do not belong to

established families in the industry and thus enhance popularity disproportionately more

after success. Furthermore, the underlying dynamics after commercial success becomes

clearer with this study: popularity represents the real value proposition of success, not

access to bigger budgets or stars or subsequent performance. Directors without

connections to film families do not gain access to resources or have prospects of improved

performance after success, but do stand to suffer with respect to their long term popularity

if they make creative movies. As a result, they make movies that are more likely to have

a high popular appeal. In their estimation, this is the only way they can prolong their

project-based creative careers. Such a strategy inevitably means a more formulaic

production, i.e., production with lower levels of creativity. Overall, the results make

contributions to the literature on creativity and dynamics of creative industries and have

52

implications on policy surrounding creative industries and for organizational practices

related to creativity and innovation management.

53

3.7. Tables and Figures

Table 3. Key Variables

Variable Operationalization(s) Role in the Study

Source

Creativity An Euclidean Distance based measure of deviation from the masala genre Binary indicator that is on for movies that exhibit content outside of the masala genre

Dependent Variable

IMDB

Commercial Success

Indicator variable on if movie was a golden jubilee hit I consider 3 types of jubilee for robustness: silver jubilee, golden jubilee, and jubilee in Bombay Circuit (not all results are reported)

Treatment Variable

Trade Guide

Budget

Size of Cast and Crew Dependent Variable, mechanism

IMDB

Stars Cumulative theatre-weeks of the lead actor Dependent Variable, mechanism

Trade Guide

Performance Number of weeks in a theatre Dependent Variable, mechanism

Trade Guide

Popularity Number of Votes for the movie on IMDB Dependent Variable, Mechanism

IMDB

Prior experience Cumulative theater-weeks of director as an indicator of prior experience Indicator variable on for top quintile directors

Moderators

54

Table 4. Eyeball Evidence: Creativity after Commercial Success

Creativity Pre – and Post – Jubilee Pre Jubilee Post Jubilee Full Sample (2426) # of Films 1556 870 # of Creative Films 804 516 % of Creative Films 52% 59%

Jubilee Directors Only (1091) # of Films 221 870 # of Creative Films 162 516 % of Creative Films 73% 59%

55

Figure 5. Creativity before and after a Golden Jubilee

Notes: This figure plots point estimates for leading and lagging indicators of a director’s achievement of a golden jubilee hit. The figure plots the point estimates of the following specification:

𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝑦𝑦𝐴𝐴𝐴𝐴 = 𝛼𝛼 + 𝛽𝛽−𝑅𝑅 ∗ 𝐽𝐽𝐽𝐽𝐽𝐽𝐶𝐶𝐽𝐽𝐶𝐶𝐶𝐶𝐴𝐴𝐴𝐴−𝑅𝑅 + 𝛽𝛽−𝑅𝑅+1 ∗ 𝐽𝐽𝐽𝐽𝐽𝐽𝐶𝐶𝐽𝐽𝐶𝐶𝐶𝐶𝐴𝐴𝐴𝐴−𝑅𝑅+1 + ⋯+ 𝛽𝛽−1 ∗ 𝐽𝐽𝐽𝐽𝐽𝐽𝐶𝐶𝐽𝐽𝐶𝐶𝐶𝐶𝐴𝐴𝐴𝐴−1 + 𝛽𝛽1∗ 𝐽𝐽𝐽𝐽𝐽𝐽𝐶𝐶𝐽𝐽𝐶𝐶𝐶𝐶𝐴𝐴𝐴𝐴+1 + ⋯+ 𝛽𝛽𝑘𝑘 ∗ 𝐽𝐽𝐽𝐽𝐽𝐽𝐶𝐶𝐽𝐽𝐶𝐶𝐶𝐶𝐴𝐴𝐴𝐴+𝑘𝑘 + 𝛾𝛾𝐶𝐶 + 𝜆𝜆𝐴𝐴 + 𝛾𝛾𝐶𝐶 ∗ 𝜆𝜆𝐴𝐴 + 𝐶𝐶𝐴𝐴𝐴𝐴

Creativity is the Euclidean distance (normalized) between the genre categorization of a movie from that of a movie in masala genre. 𝐽𝐽𝐽𝐽𝐽𝐽𝐶𝐶𝐽𝐽𝐶𝐶𝐶𝐶𝐴𝐴𝐴𝐴−𝑅𝑅 is set to 1 for n years prior to a jubilee event and 0 otherwise. Similarly, 𝐽𝐽𝐽𝐽𝐽𝐽𝐶𝐶𝐽𝐽𝐶𝐶𝐶𝐶𝐴𝐴𝐴𝐴+𝑘𝑘 is set to 1 for all k years after the attainment of a jubilee and 0 otherwise. The omitted category is the movie event where the director achieves a jubilee. 𝛾𝛾𝐶𝐶 , 𝜆𝜆𝐴𝐴 ,𝐶𝐶𝑛𝑛𝑎𝑎 𝛾𝛾𝐶𝐶 ∗ 𝐶𝐶 represent director, time effects, and director-specific time trends respectively. The vertical bars correspond to 90% confidence intervals with director-clustered standard errors.

56

Table 5. Summary Statistics

Variable Obs Mean Std. Dev. Min Max Creativity-Binary 2426 0.54 0.50 0 1 Creativity-Euclidean Distance Measure

2426 0.00 1.00 -5.61 3.22

Post Jubilee Dummy 2426 0.36 0.48 0 1 Post Golden Jubilee Dummy 2426 0.15 0.36 0 1 Post Bombay Jubilee Dummy 2426 0.32 0.47 0 1 Silver Jubilee 2426 0.11 0.31 0 1 Golden Jubilee 2426 0.03 0.16 0 1 Bombay Jubilee 2426 0.08 0.27 0 1 Year of Release 2426 1990.50 9.41 1975 2014 Jubilee Directors 2426 0.46 0.50 0 1 Movies Before and After Golden Jubilee

2426 -2.24 7.04 -34 32

Budget 2424 47.06 43.67 0 519 Stars - Cum. Theatre Weeks 2153 185.54 251.04 0 1114 Number of Weeks 1752 9.85 15.28 0 274 Director Success - Cum. Theatre Weeks

2426 56.30 82.50 0 447

Movie Sequence 2426 5.84 6.62 1 44 Film Family Director 2426 0.21 0.41 0 1 Top Quintile Director 2426 0.09 0.30 0 1 Top Quintile Non Family Director 2426 0.06 0.24 0 1 Popularity (Number of Votes) 1785 581.70 2136.42 5 35375 Rating (IMDB) 1785 5.91 1.32 1.7 8.7

57

Table 6. Percentiles of Directors and Lead Actors

Stats Actor - Cum. Theatre Week Director - Cum. Theatre Week 10th percentile 0 0 25th percentile 0 0 50th percentile 42 12 75th percentile 201 58 90th percentile 467 143 95th percentile 723 223 99th percentile 1086 377 Mean 150.38 46.56 Std. Dev. 238.07 77.29 Min 0 0 Max 1114 447 25th-75th range 201 58

58

Table 7. Main Results: Golden Jubilee

(1) (2) (3) VARIABLES Creativity-Continuous Post Golden Jubilee Dummy -0.341*** -0.403** -0.365* (0.120) (0.190) (0.192) Observations 2,046 2,046 2,046 R-squared 0.032 0.236 0.270 Number of directors 436 436 436 Director FE Yes Yes Yes Year FE Yes Yes Yes Director-Specific Time Trends Yes Yes Movie Number Control Yes Robust standard errors in parentheses *** p<0.01, ** p<0.05, * p<0.1

The table reports the point estimates of the following specification:

𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝑦𝑦𝐴𝐴𝐴𝐴 = 𝛼𝛼 + 𝛽𝛽 ∗ 𝐽𝐽𝐽𝐽𝐽𝐽𝐶𝐶𝐽𝐽𝐶𝐶𝐶𝐶𝐴𝐴𝐴𝐴 + 𝛾𝛾𝐶𝐶 + 𝜆𝜆𝐴𝐴 + 𝛾𝛾𝐶𝐶 ∗ 𝐶𝐶 + 𝐶𝐶𝐴𝐴𝐴𝐴

Creativity is the Euclidean distance (normalized) of the genre categorization of a movie from a masala genre movie. 𝐽𝐽𝐽𝐽𝐽𝐽𝐶𝐶𝐽𝐽𝐶𝐶𝐶𝐶𝐴𝐴𝐴𝐴 is set to 1 if the movie is released after the direct achieves a golden jubilee and 0 otherwise. 𝛾𝛾𝐶𝐶 , 𝜆𝜆𝐴𝐴 , 𝐶𝐶𝑛𝑛𝑎𝑎 𝛾𝛾𝐶𝐶 ∗ 𝐶𝐶 represent director, time, and director-specific time trends respectively.

59

Table 8. Main Results: Golden Jubilee and Top Non-Family Directors

(1) (2) VARIABLES Creativity-Continuous Post Golden Jubilee Dummy -0.294** -0.292 (0.120) (0.205) Top Non Family Dir. 0.177 0.373 (0.201) (0.276) Top Non Family Dir.*Post Jubilee -0.276 -0.662* (0.314) (0.387) Observations 2,046 2,046 R-squared 0.033 0.238 Number of directors 436 436 Director FE Yes Yes Year FE Yes Yes Director-Specific Time Trends Yes Movie Sequence Control Robust standard errors in parentheses *** p<0.01, ** p<0.05, * p<0.1

The table reports the point estimates of the following specification:

𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝑦𝑦𝐴𝐴𝐴𝐴 = 𝛼𝛼 + 𝛽𝛽1 ∗ 𝐽𝐽𝐽𝐽𝐽𝐽𝐶𝐶𝐽𝐽𝐶𝐶𝐶𝐶𝐴𝐴𝐴𝐴 + 𝛽𝛽2 ∗ 𝜙𝜙𝐶𝐶 + 𝛿𝛿(𝐽𝐽𝐽𝐽𝐽𝐽𝐶𝐶𝐽𝐽𝐶𝐶𝐶𝐶𝐴𝐴𝐴𝐴 ∗ 𝜙𝜙𝐶𝐶) + 𝜆𝜆𝐴𝐴 + 𝛾𝛾𝐶𝐶 + 𝛾𝛾𝐶𝐶 ∗ 𝐶𝐶 + 𝐶𝐶𝐴𝐴𝐴𝐴

Creativity is the Euclidean distance (normalized) of the genre categorization of a movie from a masala genre movie. 𝐽𝐽𝐽𝐽𝐽𝐽𝐶𝐶𝐽𝐽𝐶𝐶𝐶𝐶𝐴𝐴𝐴𝐴 is set to 1 if the movie is released after the director achieves a golden jubilee and 0 otherwise. 𝜆𝜆𝐴𝐴 , 𝛾𝛾𝐶𝐶 ,𝐶𝐶𝑛𝑛𝑎𝑎 𝛾𝛾𝐶𝐶 ∗ 𝐶𝐶 represent time, director effects, and director-specific time trends respectively. 𝜙𝜙𝐶𝐶 captures top non-film family director effects; and, 𝛿𝛿 represents the Difference-in-Differences parameter.

60

Figure 6. Creativity goes down after Golden Jubilee

Notes: This figure plots point estimates for interaction between leading and lagging indicators of a top non-film family director’s achievement of a golden jubilee hit. The figure plots the point estimates of the following specification:

𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝑦𝑦𝐴𝐴𝐴𝐴 = 𝛼𝛼 + 𝛽𝛽−𝑅𝑅(𝜙𝜙𝑎𝑎 ∗ 𝐽𝐽𝐽𝐽𝐽𝐽𝐶𝐶𝐽𝐽𝐶𝐶𝐶𝐶𝐴𝐴𝐴𝐴−𝑅𝑅) + 𝛽𝛽−𝑅𝑅+1(𝜙𝜙𝑎𝑎 ∗ 𝐽𝐽𝐽𝐽𝐽𝐽𝐶𝐶𝐽𝐽𝐶𝐶𝐶𝐶𝐴𝐴𝐴𝐴−𝑅𝑅+1) + ⋯+ 𝛽𝛽−1(𝜙𝜙𝑎𝑎 ∗ 𝐽𝐽𝐽𝐽𝐽𝐽𝐶𝐶𝐽𝐽𝐶𝐶𝐶𝐶𝐴𝐴𝐴𝐴−1)+ 𝛽𝛽1(𝜙𝜙𝑎𝑎 ∗ 𝐽𝐽𝐽𝐽𝐽𝐽𝐶𝐶𝐽𝐽𝐶𝐶𝐶𝐶𝐴𝐴𝐴𝐴+1) + ⋯+ 𝛽𝛽𝑘𝑘(𝜙𝜙𝑎𝑎 ∗ 𝐽𝐽𝐽𝐽𝐽𝐽𝐶𝐶𝐽𝐽𝐶𝐶𝐶𝐶𝐴𝐴𝐴𝐴+𝑘𝑘) + 𝛾𝛾𝐶𝐶 + 𝜆𝜆𝐴𝐴 + 𝛾𝛾𝐶𝐶 ∗ 𝐶𝐶 + 𝐶𝐶𝐴𝐴𝐴𝐴

Creativity is the Euclidean distance (normalized) between the genre categorization of a movie from that of a movie in masala genre. 𝐽𝐽𝐽𝐽𝐽𝐽𝐶𝐶𝐽𝐽𝐶𝐶𝐶𝐶𝐴𝐴𝐴𝐴−𝑅𝑅 is set to 1 for n years prior to a jubilee event and 0 otherwise. Similarly, 𝐽𝐽𝐽𝐽𝐽𝐽𝐶𝐶𝐽𝐽𝐶𝐶𝐶𝐶𝐴𝐴𝐴𝐴+𝑘𝑘 is set to 1 for all k years after the attainment of a jubilee and 0 otherwise. The omitted category is the movie event where the director achieves a jubilee. 𝜆𝜆𝐴𝐴 , 𝛾𝛾𝐶𝐶 ,𝐶𝐶𝑛𝑛𝑎𝑎 𝛾𝛾𝐶𝐶 ∗ 𝐶𝐶 represent time, director effects, and director-specific time trends respectively. 𝜙𝜙𝐶𝐶 captures top non-film family director effects. The vertical bars correspond to 90% confidence intervals with director-clustered standard errors.

61

Table 9. Mechanism: Comparisons of Other Pre-Post Jubilee Figures

Budget

Pre Jubilee Post Jubilee

Full Sample 38 65 Jubilee Directors 55 65

Access to Stars

Pre Jubilee Post Jubilee Full Sample 138 227 Jubilee Directors 153 227

Performance

Pre Jubilee Post Jubilee Full Sample 7.58 13.83 Jubilee Directors 13.83 28.71

Popularity

Pre Jubilee Post Jubilee Full Sample 344 1038 Jubilee Directors 894 1038

62

Table 10. Mechanism – Budget

(1) (2) (3) VARIABLES Budget Budget Budget Post Golden Jubilee Dummy 3.287 -1.900 -2.900 (6.419) (8.016) (8.388) Top Non Family Dir. -0.207 -4.628 -8.792 (5.888) (9.637) (9.188) Top Non Family Dir.*Post Jubilee 5.848 4.361 7.861 (9.458) (13.84) (12.64) Constant 68.17*** 4,027*** 5,695*** (5.319) (1,377) (1,711) Observations 2,044 2,044 2,044 R-squared 0.046 0.282 0.307 Number of directors 436 436 436 Director FE Yes Yes Yes Year FE Yes Yes Yes Director-Specific Time Trends Yes Yes Movie Sequence Control Yes Robust standard errors in parentheses *** p<0.01, ** p<0.05, * p<0.1

The table reports the point estimates of the following specification:

𝐵𝐵𝐽𝐽𝑎𝑎𝐵𝐵𝐶𝐶𝐶𝐶𝐴𝐴𝐴𝐴 = 𝛼𝛼 + 𝛽𝛽1 ∗ 𝐽𝐽𝐽𝐽𝐽𝐽𝐶𝐶𝐽𝐽𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶 + 𝛽𝛽2 ∗ 𝜙𝜙𝑎𝑎 + 𝛿𝛿�𝐽𝐽𝐽𝐽𝐽𝐽𝐶𝐶𝐽𝐽𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶 ∗ 𝜙𝜙𝑎𝑎� + 𝜆𝜆𝐶𝐶 + 𝛾𝛾𝑎𝑎 + 𝛾𝛾𝑎𝑎 ∗ 𝐶𝐶 + 𝐶𝐶𝐶𝐶𝐶𝐶

Budget is measured by the size of cast and crew of a movie on IMDB. 𝐽𝐽𝐽𝐽𝐽𝐽𝐶𝐶𝐽𝐽𝐶𝐶𝐶𝐶𝐴𝐴𝐴𝐴 is set to 1 if the movie is released after the director achieves a golden jubilee and 0 otherwise. 𝜆𝜆𝐴𝐴 , 𝛾𝛾𝐶𝐶 , 𝐶𝐶𝑛𝑛𝑎𝑎 𝛾𝛾𝐶𝐶 ∗ 𝐶𝐶 represent time and director effects, and director-specific time trends respectively. 𝜙𝜙𝐶𝐶 captures top non-film family director effects; and, 𝛿𝛿 represents the Difference-in-Differences parameter.

63

Table 11. Mechanism – Stars

(1) (2) (3)

VARIABLES Stars - Cum.

Theatre Weeks Stars - Cum.

Theatre Weeks Stars - Cum.

Theatre Weeks Post Golden Jubilee Dummy 58.98* 68.25 72.23 (33.24) (46.75) (46.92) Top Non Family Dir. 125.0** 114.1 74.85 (61.01) (102.9) (92.60) Top Non Family Dir.*Post Jubilee -230.5*** -253.5* -243.1** (85.59) (149.5) (121.6) Constant 0.211 -3,424 8,489 (24.18) (3,897) (9,195) Observations 1,960 1,960 1,960 R-squared 0.078 0.274 0.310 Number of directors 433 433 433 Director FE Yes Yes Yes Year FE Yes Yes Yes Director-Specific Time Trends Yes Yes Movie Sequence Control Yes Robust standard errors in parentheses *** p<0.01, ** p<0.05, * p<0.1

The table reports the point estimates of the following specification:

𝑆𝑆𝐶𝐶𝐶𝐶𝐶𝐶𝐴𝐴𝐴𝐴 = 𝛼𝛼 + 𝛽𝛽1 ∗ 𝐽𝐽𝐽𝐽𝐽𝐽𝐶𝐶𝐽𝐽𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶 + 𝛽𝛽2 ∗ 𝜙𝜙𝑎𝑎 + 𝛿𝛿�𝐽𝐽𝐽𝐽𝐽𝐽𝐶𝐶𝐽𝐽𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶 ∗ 𝜙𝜙𝑎𝑎� + 𝜆𝜆𝐶𝐶 + 𝛾𝛾𝑎𝑎 + 𝛾𝛾𝑎𝑎 ∗ 𝐶𝐶 + 𝐶𝐶𝐶𝐶𝐶𝐶

Star is measured by the cumulative number of weeks for the lead actor of a movie prior to the release of the movie. 𝐽𝐽𝐽𝐽𝐽𝐽𝐶𝐶𝐽𝐽𝐶𝐶𝐶𝐶𝐴𝐴𝐴𝐴 is set to 1 if the movie is released after the director achieves a golden jubilee and 0 otherwise. 𝜆𝜆𝐴𝐴 , 𝛾𝛾𝐶𝐶 , 𝐶𝐶𝑛𝑛𝑎𝑎 𝛾𝛾𝐶𝐶 ∗ 𝐶𝐶 represent time and director effects, and director-specific time trends respectively. 𝜙𝜙𝐶𝐶 captures top non-film family director effects; and, 𝛿𝛿 represents the Difference-in-Differences parameter.

64

Table 12. Mechanism – Performance

(1) (2) (3) VARIABLES Number of Weeks in Cinema Halls Post Golden Jubilee Dummy -20.19*** -19.52** -20.85** (6.961) (8.055) (8.166) Top Non Family Dir. -4.859** -5.279 -8.305* (2.190) (3.692) (4.302) Top Non Family Dir.*Post Jubilee 11.36 -5.136 -1.493 (7.826) (10.09) (9.759) Constant 26.18*** -602.8 1,380 (6.576) (381.0) (2,084) Observations 1,372 1,372 1,372 R-squared 0.174 0.483 0.512 Number of directors 412 412 412 Director FE Yes Yes Yes Year FE Yes Yes Yes Director-Specific Time Trends Yes Yes Movie Sequence Control Yes Robust standard errors in parentheses *** p<0.01, ** p<0.05, * p<0.1

The table reports the point estimates of the following specification:

𝑃𝑃𝐶𝐶𝐶𝐶𝑃𝑃𝑃𝑃𝐶𝐶𝑃𝑃𝐶𝐶𝑛𝑛𝑃𝑃𝐶𝐶𝐴𝐴𝐴𝐴 = 𝛼𝛼 + 𝛽𝛽1 ∗ 𝐽𝐽𝐽𝐽𝐽𝐽𝐶𝐶𝐽𝐽𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶 + 𝛽𝛽2 ∗ 𝜙𝜙𝑎𝑎 + 𝛿𝛿�𝐽𝐽𝐽𝐽𝐽𝐽𝐶𝐶𝐽𝐽𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶 ∗ 𝜙𝜙𝑎𝑎� + 𝜆𝜆𝐶𝐶 + 𝛾𝛾𝑎𝑎 + 𝛾𝛾𝑎𝑎 ∗ 𝐶𝐶 + 𝐶𝐶𝐶𝐶𝐶𝐶

Performance is measured by number of weeks in the theatre. 𝐽𝐽𝐽𝐽𝐽𝐽𝐶𝐶𝐽𝐽𝐶𝐶𝐶𝐶𝐴𝐴𝐴𝐴 is set to 1 if the movie is released after the director achieves a golden jubilee and 0 otherwise. 𝜆𝜆𝐴𝐴 , 𝛾𝛾𝐶𝐶 , 𝐶𝐶𝑛𝑛𝑎𝑎 𝛾𝛾𝐶𝐶 ∗ 𝐶𝐶 represent time and director effects, and director-specific time trends respectively. 𝜙𝜙𝐶𝐶 captures top non-film family director effects; and, 𝛿𝛿 represents the Difference-in-Differences parameter.

65

Table 13. Mechanism – Popularity

(1) (2) (3)

VARIABLES Popularity - Number of Votes on

IMDB Post Golden Jubilee Dummy -577.0 -923.1* -1,080* (443.0) (493.8) (584.4) Top Non Family Dir. -239.7 -205.2 -99.62 (222.5) (190.0) (248.1) Top Non Family Dir.*Post Jubilee 703.4* 794.3* 999.3* (402.2) (459.2) (561.8) Observations 1,648 1,648 1,648 R-squared 0.065 0.335 0.351 Number of directors 364 364 364 Director FE Yes Yes Yes Year FE Yes Yes Yes Director-Specific Time Trends Yes Yes Movie Sequence Control Yes Robust standard errors in parentheses *** p<0.01, ** p<0.05, * p<0.1

The table reports the point estimates of the following specification:

𝑃𝑃𝑃𝑃𝑃𝑃𝐽𝐽𝐽𝐽𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝑦𝑦𝐴𝐴𝐴𝐴 = 𝛼𝛼 + 𝛽𝛽1 ∗ 𝐽𝐽𝐽𝐽𝐽𝐽𝐶𝐶𝐽𝐽𝐶𝐶𝐶𝐶𝐴𝐴𝐴𝐴 + 𝛽𝛽2 ∗ 𝜙𝜙𝐶𝐶 + 𝛿𝛿(𝐽𝐽𝐽𝐽𝐽𝐽𝐶𝐶𝐽𝐽𝐶𝐶𝐶𝐶𝐴𝐴𝐴𝐴 ∗ 𝜙𝜙𝐶𝐶) + 𝜆𝜆𝐴𝐴 + 𝛾𝛾𝐶𝐶 + 𝛾𝛾𝐶𝐶 ∗ 𝐶𝐶 + 𝐶𝐶𝐴𝐴𝐴𝐴

Popularity is measured by the number of votes for the movie on IMDB. 𝐽𝐽𝐽𝐽𝐽𝐽𝐶𝐶𝐽𝐽𝐶𝐶𝐶𝐶𝐴𝐴𝐴𝐴 is set to 1 if the movie is released after the director achieves a golden jubilee and 0 otherwise. 𝜆𝜆𝐴𝐴 , 𝛾𝛾𝐶𝐶 , 𝐶𝐶𝑛𝑛𝑎𝑎 𝛾𝛾𝐶𝐶 ∗ 𝐶𝐶 represent time and director effects, and director-specific time trends respectively. 𝜙𝜙𝐶𝐶 captures top non-film family director effects; and, 𝛿𝛿 represents the Difference-in-Differences parameter.

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Figure 7. Popularity

Notes: This figure plots point estimates for leading and lagging indicators of a director’s achievement of a golden jubilee hit. The figure plots the point estimates of the following specification:

𝑃𝑃𝑃𝑃𝑃𝑃𝐽𝐽𝐽𝐽𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝑦𝑦𝐴𝐴𝐴𝐴 = 𝛼𝛼 + 𝛽𝛽−𝑅𝑅(𝜙𝜙𝑎𝑎 ∗ 𝐽𝐽𝐽𝐽𝐽𝐽𝐶𝐶𝐽𝐽𝐶𝐶𝐶𝐶𝐴𝐴𝐴𝐴−𝑅𝑅) + 𝛽𝛽−𝑅𝑅+1(𝜙𝜙𝑎𝑎 ∗ 𝐽𝐽𝐽𝐽𝐽𝐽𝐶𝐶𝐽𝐽𝐶𝐶𝐶𝐶𝐴𝐴𝐴𝐴−𝑅𝑅+1) + ⋯+ 𝛽𝛽−1(𝜙𝜙𝑎𝑎 ∗ 𝐽𝐽𝐽𝐽𝐽𝐽𝐶𝐶𝐽𝐽𝐶𝐶𝐶𝐶𝐴𝐴𝐴𝐴−1)+ 𝛽𝛽1(𝜙𝜙𝑎𝑎 ∗ 𝐽𝐽𝐽𝐽𝐽𝐽𝐶𝐶𝐽𝐽𝐶𝐶𝐶𝐶𝐴𝐴𝐴𝐴+1) + ⋯+ 𝛽𝛽𝑘𝑘(𝜙𝜙𝑎𝑎 ∗ 𝐽𝐽𝐽𝐽𝐽𝐽𝐶𝐶𝐽𝐽𝐶𝐶𝐶𝐶𝐴𝐴𝐴𝐴+𝑘𝑘) + 𝛾𝛾𝐶𝐶 + 𝜆𝜆𝐴𝐴 + 𝛾𝛾𝐶𝐶 ∗ 𝐶𝐶 + 𝐶𝐶𝐴𝐴𝐴𝐴

Popularity is measured by the number of votes for the movie on IMDB. 𝐽𝐽𝐽𝐽𝐽𝐽𝐶𝐶𝐽𝐽𝐶𝐶𝐶𝐶𝐴𝐴𝐴𝐴−𝑅𝑅 is set to 1 for n years prior to a jubilee event and 0 otherwise. Similarly, 𝐽𝐽𝐽𝐽𝐽𝐽𝐶𝐶𝐽𝐽𝐶𝐶𝐶𝐶𝐴𝐴𝐴𝐴+𝑘𝑘 is set to 1 for all k years after the attainment of a silver jubilee and 0 otherwise. The omitted category is the movie event where the director achieves a jubilee. 𝛾𝛾𝐶𝐶 , 𝜆𝜆𝐴𝐴 ,𝐶𝐶𝑛𝑛𝑎𝑎 𝛾𝛾𝐶𝐶 ∗ 𝐶𝐶 represent director, time, and director-specific time effects respectively. The vertical bars correspond to 90% confidence intervals with director-clustered standard errors.

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Table 14. Change in relative preferences for top non-film family directors

Pre-Jubilee Post-Jubilee Creativity Popularity Creativity Popularity Creativity 1 1 Popularity 0.0635 1 -0.2765 1 Creativity Number of Weeks Creativity Number of Weeks Creativity 1 1 Number of Weeks -0.2176 1 0.0100 1

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Chapter 4. Structuring, Bundling—but Leveraging? Impact of Performance on Resource Management

4.1. Introduction

Over the past few decades, resource-based theory (RBT)—the understanding that

a firm’s valuable, rare, inimitable, and non-substitutable resources drive competitive

advantages (Barney, 1991; Peteraf, 1993; Wernerfelt, 1984)—has gained increasing

prominence within strategic management. However, much work is still required in this

domain. Indeed, the possibility of either revitalization or decline for the paradigm remains

open according to some leading authorities of RBT (Barney, Ketchen, & Wright, 2011).

RBT scholars have earmarked several areas such as introduction of novel methodologies

and measurements, exploration of micro processes of RBT, interplay of RBT, and other

theories of strategic management as domains that merit future research. Such a mixed

backdrop clearly represents a field replete with opportunities for theory synthesizing and

theory enhancing work. This study attempts to contribute to RBT by performing some of

such work. To do so, it utilizes an economically thriving resource-intensive setting: the

Hindi film industry, Bollywood, in India.

Creative production is by nature resource intensive (Miller & Shamsie, 1996). It

requires unique creative resources—either science- or arts-intensive—as well as systemic

resources that facilitate the promotion and distribution of the creative product (Caves,

2000, 2003; Miller & Shamsie, 1996). This resource-intensive nature of production makes

creative industries an excellent setting for studying the role resource management plays

in a firm’s competitiveness and strategy. However, these industries aren’t just good

laboratories; economically, these industries play an important role in economies around

the world (Flew, 2012). In the UK, the creative industries employ about 1 million (The Work

Foundation, 2007); while in the US, the arts and culture industry accounts for 3.2% of the

economy (National Endowment of Arts, 2013). Therefore, by studying creative industries,

we not only stand to learn much about RBT and management in other industries where

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profits are driven by resources, but also stand to benefit economically through a better

understanding of a slew of creative industries that play a pivotal role in our economies

(Flew & Cunningham, 2010; Scott, 2006).

To enhance our understanding of RBT, I utilize novel archival data from Bollywood

and exploit an event of box office success in order to identify a causal link between

previous success and subsequent resource management, defined as a process of

attaining resource-based competitive advantage by acquiring, structuring, and efficiently

leveraging resources within organizations (Sirmon et al., 2007). The resource

management framework adds richness to RBT by incorporating within it the testability of

micro-processes of acquiring, bundling, and leveraging resources for competitive

advantage, in contrast to assuming that resources provide competitive advantage through

some unknown black-box mechanism (Sirmon et al., 2007, 2011). While possession of

resources is paramount, the utilization of the same is no less important. The resource

management framework stresses the importance of the latter and highlights the need for

research on how managers at different levels of an organization perform resource

management to attain profits across industries, governance structures, and firm life cycles

(Sirmon et al., 2011). This chapter strives to address a few of these open research

questions within RBT.

To explore resource management, I employ a two-pronged approach. First, to

investigate the impact of family influence on resource management, I identify film directors

that belong to experienced film families within Bollywood. These film families in Bollywood

have been involved in the filmmaking business for at least two generations and hence

have significant experience advantage over new comers in the industry. Scholars point

that, family led firms, with their unique mechanisms to accumulate resources such as

reputational capital and tacit knowledge, present unique opportunities for enhancing RBT

(Arregle, Hitt, Sirmon, & Very, 2007; Chirico, Sirmon, Sciascia, & Mazzola, 2011). Utilizing

the setting of Bollywood, I am able to explore the systematic differences between film

family managers—directors in this case—and those without any family connections in the

industry in terms of their resource management. Belonging to a film family endows the

manager and the venture with the following advantages: legitimacy and experience in the

community (Carney & Gedajlovic, 2002); significant resources (Lorenzen & Täube, 2008;

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Wankhade, 2009); and social capital (Arregle et al., 2007). Thus, family connections in

resource-intensive film projects can potentially have a material impact on resource

management. Second, resource management becomes of paramount importance during

transitions, be it because of reasons such as environmental changes (Miller & Shamsie,

1996) or organizational level changes in portfolios (Shamsie et al., 2009; Sirmon et al.,

2011) or others. Therefore, in my investigation of resource management, I identify a period

that clearly represents a transition: the period following the completion of a commercially

successful project. Within this post-success period, I focus on the resource management

of family and non-film family managers. In particular, I concentrate on identifying the

manager’s ability to a) structure (secure larger teams), b) bundle (enrich and pioneer using

creative human resources), and c) leverage the acquired resources for value creation. In

my investigation, utilizing data from Bollywood, I leverage the notion of a golden jubilee

movie—50 weeks or more at the theatres—to capture the exogenous event of commercial

success and observe the resource management following this successful event.

Employing similar DD analyses, I find no evidence supporting the theory that a

successful project performance leads to more resource structuring. In other words, there

is no evidence that either family or non-family managers assemble larger teams. There

does not seem to be a huge enhancement in team size after a commercially successful

project. Second, DD analyses uncovers that directors do not generally have access to

higher quality human capital after a jubilee. In other words, a successful movie does not

enable directors to pioneer or enrich their set of resources; however, directors belonging

to film families do enjoy access to disproportionately better human capital after commercial

success and are able to enrich their resource set. Third, the analyses reveal that family

and non-family managers leverage their resources differently. In particular, while film

family managers choose to leverage their enriched resources to produce quality creative

products, non-film family managers, who do not experience a significant shock in their

structuring and bundling capabilities after success, do not. However, on average, high

performing directors—regardless of their connections with film families—choose to

leverage their resources for more mass appeal and popularity after achieving success.

Taken together, the results show that family and non-family managers, directors in

this case, are affected differently in terms of their resource management potential after

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successful career events. That is, while resource structuring remains largely unchanged

for both types of directors, significant differences can be observed in terms of resource

bundling (pioneering and enriching) and consequent leveraging of the resources.

Specifically, only film family managers seem to be concerned about the quality of their

products, and they leverage their resources accordingly. The results shed light on the

resource-related processes that managers initiate and oversee (Kraaijenbrink, Spender,

& Groen, 2010), an area of RBT earmarked for more research.

This finding has important implications for managerial practices in resource-

intensive environments. First, it points to the difference in mangers’ ability to acquire

resources, with those belonging to experienced film families having the advantage over

those who do not. Success alone does not enable access to resources for managers;

social networks and embeddedness are paramount for resource bundling and structuring.

As a result, only film family managers are able to enrich their resource bundle. Second,

the manager, along with institutional context, determines both the direction and goal of

resource leveraging. These determinants are often ignored in analyses that are anchored

in RBT. I highlight that a manager’ pre-success levels of embeddedness (through film

families) and reputation play an integral part in determining what s/he decides to do with

the resources at hand. Overall, the results make a strong case for individual-level

determinants of resource management by managers.

The rest of the chapter proceeds as follows. In the next section (4.2), I review the

extant literature on resource management and develop testable hypotheses. In section

4.3, I describe the data and empirical identification strategy. Section 4.4 presents the

results. Section 4.5 discusses the implications of the results for theory, practice, and

policy. Section 4.6 provides a conclusion.

4.2. Theory and Hypotheses: Resource Management

In this section, I present theoretical considerations in order to motivate an empirical

analysis of -managers’ resource management strategy following a successful project

completion. First, I present some literature and theory on how commercial success can

affect resource bundling and structuring. I then theorize about the manager’s underlying

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motivations for the actions they take regarding resource leveraging. Finally, I present

hypotheses regarding the moderating impact of previous connections with experienced

film families in the industry. Figure 8 presents the resource management model that I

formally hypothesize and test in this chapter.

4.2.1. Resource Structuring

The resource management framework places the highest importance on resource

structuring—the art of acquiring, accumulating, and even divesting resources (Sirmon et

al., 2007, 2011). After all, an individual needs to first possess resources before s/he can

devise strategies for using them. High performance inevitably brings more financial and

human resources to a firm while simultaneously it also fosters social connections and

improves access to other systemic and knowledge resources (Crook, Ketchen, Combs, &

Todd, 2008; Shamsie et al., 2009). Resource structuring represents the first stage and

requires managers to augment their current resource sets.

Resource structuring incorporates acquiring, accumulating, and divesting of

resources by the manager (Dierickx & Cool, 1989; Makadok, 2001). The completion of a

high performing movie bodes well for the directors since box office success inevitably

ushers in increased popularity. A successful cinematic project and its consequent

celebrations are designed to shed a spotlight on the director so as to facilitate access to

and collaboration with other leading actors and industry production houses. In creative

industries, as with many other industries where interpersonal ties are conduits to human

and creative capital (Usai, Delmestri, & Montanari, 2001), these enhanced social networks

act as a medium through which ideas and resources are exchanged. Indeed, the literature

on creative industries is full of studies providing evidence that social ties and good

reputation impact interaction with key complementors and actors within the industry

(Sorenson & Waguespack, 2006). Therefore, I reason that a positive social shock

represented by commercial success is positively related to the resource structuring

potential of the manager, particularly in the areas of resource acquisition and

accumulation.

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Often times, the landscape of these resource-intensive creative industries are

dominated by family led and managed firms who are hereditarily endowed with unique

resources that can be leveraged by film family managers to attain competitive advantage

(Shukla, Carney, & Gedajlovic, 2013). The directors belonging to film families have unique

access to the family social capital as well as the organizational social capital (Arregle et

al., 2007). Directors, the managers of film projects, are expected to utilize their relatives’

and friends’ human capital (Sanders & Nee, 1996) for new business and employment

opportunities (Lester & Cannella, 2006). I reason that for the established directors

belonging to film families, a successful event is likely to have a less pronounced impact

on resource structuring. I do not expect large positive resource shocks for directors who

belong to film families after a jubilee as they already have access to large resource sets.

Therefore, the returns to additional acquiring and accumulating are low. Overall, I present

the following hypotheses on resource structuring:

H1a: Commercial success is positively related to resource structuring.

H1b: The relationship between commercial success and structuring is negatively

moderated for film family mangers.

4.2.2. Resource Bundling

The resource bundling aspect of resource management involves managers taking

steps to stabilize, enrich, and pioneer the resources at hand so as to integrate the

resources and build capabilities (Sirmon et al., 2007, 2011). I reason that high

performance is also likely to be positively associated with resource bundling. Several

studies applying the RBT lens have described the advantage of bundling superior human

capital—pioneering and enriching—within current capabilities. This may be the case in

contexts of diversification strategies (Hitt, Bierman, Uhlenbruck, & Shimizu, 2006) or, more

generally, in moderating the relationship between strategy and performance (Hitt,

Biermant, Shimizu, & Kochhar, 2001). Therefore, following success, managers certainly

have the incentive to enrich their resources. After commercial success they have the

means too. Successful individuals in creative industries tend to cluster and control a

disproportionately high percentage of the available resources (Currah, 2006; Rosen,

1981; Wankhade, 2009). Success provides access to the domain’s elite, and in doing so

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can enable mangers to enhance their resource bundles. Though a manager’s ability to

bundle the resources may vary, the presumed higher access to resources (hypothesized

above) and connection to high quality resources provide them with more opportunities for

resource bundling, particularly in the dimensions of pioneering and enriching.

While I posit a positive relationship between commercial success and resource

bundling, I reason that there will be a difference in how much film family managers and

non-family managers succeed in resource bundling during the post-success period.

Sirmon and Hitt (2003) present an analysis based on the synergy of affective logics such

as stewardship and personalism that prevails in firms led by family heads. The authors

contend that such firms are better equipped to cultivate intangible resources such as those

contained in human and social capital through close connections with the community of a

firm’s stakeholders (Miller, Le Breton‐Miller, & Scholnick, 2008). Such a closely-knit

stakeholder community is of paramount importance in a creative industry. Thus, a

successful outcome will potentially be the catalyst for attracting better human capital

through a director’s personal and organizational social capital. Therefore, I reason that

belonging to a film family will likely positively moderate the resource bundling by the

managers, particularly in terms of pioneering and enriching, by accessing the best creative

resources.

H2a: Commercial success is positively related to resource bundling.

H2b: The relationship between commercial success and bundling is positively

moderated for film family managers.

4.2.3. Resource Leveraging

Between 1975 and 1995, the Trade Guide magazine, from where I derive my

jubilee information, was the only recognized industry trade magazine in India. It suffices

to say that the celebratory and congratulatory ads in the magazine were the most effective

way for a manager to signal success and ability to attract possible investors and

collaborators. In the pre-Internet era, the tendency of creative industries’ elite to form

exclusive cliques (Elberse, 2007) and the oligopolistic dynamic of big studios (Currah,

2006; Wankhade, 2009) meant that once in good terms with the big studios, the director

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could access the biggest stars, the biggest budget, and the most significant distribution

channels, which minimized his/her chances of failure (Sorenson & Waguespack, 2006).

After attaining success, as represented by a jubilee, and presumably access to better and

more human capital, managers had the option to leverage their resources for the type of

filmmaking they preferred. I believe that resource leveraging will also vary based on

whether or not managers are connected with film families.

I reason that managers who are related to film families will have different

motivations for their leveraging strategies after attaining success from those who are

unrelated to film families. In particular, film family managers are more likely to be more

quality focused for two primary reasons: first, as hypothesized above, they are more likely

to be better poised for resource bundling after attaining success; second, family firms are

characterized by unique advantages such as stewardship (Miller et al., 2008), non-

economic motivations (Gómez-Mejía, Haynes, Núñez-Nickel, Jacobson, & Moyano-

Fuentes, 2007), and concerns about reputation (Gedajlovic & Carney, 2010). In sum,

managers belonging to film families are already embedded in the industry, accustomed to

popularity, and have a family brand/reputation (Lorenzen & Anderson, 2012) to maintain.

Therefore, I reason that the leveraging strategy of film family managers is likely to be more

quality focused, as opposed to popularity focused. On the other hand, directors without

these film family connections do not enjoy these advantages. On the contrary, they are

new to popularity and have only experienced a shock to popularity through the jubilee

achievement and celebrations. In an industry where collaborations are decided based on

personal relations, these directors need to capitalize on this success or else face real risk

of career termination if they are unable to continue to produce successful movies

(Lorenzen & Anderson, 2012). Furthermore, focusing on mass appeal requires less new

learning or exploration; instead, it demands engaging in exploitation (Levinthal & March,

1993; March, 1991) through the replication of previously successful formulaic creative

production. As a result, I expect non-film family managers to leverage their resources for

mass appeal after posting a successful project. I thus hypothesize that:

H3a: Commercial success leads to film family managers leveraging toward quality.

H3b: Commercial success leads to non-family managers leveraging toward mass

appeal.

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4.3. Setting, Data, and Empirical Framework

4.3.1. Data Collection

I utilize archival data from Bollywood to test my hypotheses. As unique resource

inputs and products are the hallmarks of creative industries, they are a natural setting for

studying the hypotheses pertaining to resource management. While the dataset for testing

the hypotheses presented remains predominantly the same as in chapter 3, I introduce

new and required variables and analyses test the hypotheses presented here. First, I focus

my analyses on at least one new variable that is significant in our theory for each of the

movie projects: its IMDB rating. In the remainder of this section, I briefly describe the main

variables of interest for our hypotheses testing and the empirical identification strategy.

4.3.2. Variables of Interest

For commercial success, as before, I use a jubilee movie as an indicator variable

representing whether a movie runs beyond 25 weeks at a theatre to gauge commercial

success. I use a golden jubilee—50 weeks or more—as my main treatment variable. Table

15 presents a summary of other variables that I employ in my exploration of the resource

management process. The table also explains the variables’ sources and their roles in the

study. I measure resource structuring for a movie by using a count of the cast and crew

members. This measure accurately captures either the acquisition or accumulation of

resources (in terms of human capital), or their divestiture. For resource bundling, i.e.,

stabilizing, pioneering, or enriching, I use the cumulative theatre-weeks of lead actors,

following previous literature that uses cumulative performance and artistic variables to

measure quality of the lead actor (Ferriani et al., 2009). In other words, the higher the

cumulative success of the lead actor a director can employ for his movies after a jubilee,

the higher his resource enriching. I code indicator variables for top directors using a similar

theatre-weeks measurement, and I also use an indicator for film family managers who

belong to established film dynasties/families in Bollywood. To capture top director effects,

I use an indicator variable that is ‘on’ if a director is in the top quintile of all the directors in

terms of cumulative performance of his/her movies. To test the resource leveraging

hypotheses, I measure the cumulative mass appeal of a movie by the number of votes

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received by a movie on IMDB. Similarly, I use the cumulative IMDB rating as a measure

of quality of a movie. Some arguments against the use of IMDB rating as a measure of

critical artistry exist. For instance, peer reviews or scores from critics might be more fitting

for this purpose. However, given the cumulative and crowdsourced nature of IMDB ratings,

I reason that it has some face and internal validity as a measure of quality of the creative

product.

4.3.3. Identification Strategy

An ideal experiment to study how managers transform resources to create value

would require a random allocation of resources to a heterogeneous group of managers,

after which the researcher would observe the differences in the resource management

process in these directors before and after the resource allocation in comparison with

managers who did not receive the random treatment. To elaborate, first, I could observe

the before-after differences in value creation among managers who receive the resource

windfall—the treatment—and those who don’t. Second, I could also observe the difference

in these differences across a range of manager groups. To mimic this experimental ideal,

I employ difference-in-differences estimations (Angrist & Pischke, 2008). The underlying

identification assumption in my analysis is that conditional upon the observed covariates,

a jubilee event—the treatment of success—is as good as randomly assigned (formally,

uncorrelated with outcome variables). Given the covariates I control for and the nature of

the creative industries—where nobody knows if the creative product will appeal to the

masses (Caves, 2000; Goldman, 1989)—the assumption seems reasonable. Formally, I

first estimate the model:

𝑌𝑌𝐴𝐴𝐴𝐴 = 𝛼𝛼 + 𝛽𝛽 ∗ 𝐽𝐽𝐽𝐽𝐽𝐽𝐶𝐶𝐽𝐽𝐶𝐶𝐶𝐶𝐴𝐴𝐴𝐴 + 𝛾𝛾𝐶𝐶 + 𝜆𝜆𝐴𝐴 + 𝛾𝛾𝐶𝐶 ∗ 𝐶𝐶 + 𝐶𝐶𝐴𝐴𝐴𝐴

In this specification, 𝛾𝛾𝐶𝐶 , 𝜆𝜆𝐴𝐴 , and 𝛾𝛾𝐶𝐶 ∗ 𝐶𝐶, are director-fixed effects, time-fixed effects

and director-specific time controls, respectively. The dependent variable, 𝑦𝑦, takes on

measurements for resource structuring, bundling, and leveraging, as discussed above.

The time dummies and director-fixed effects subsume the traditional post-treatment and

treated cross-sectional unit coefficients, respectively. Since the data is structured as a

panel, I run panel data estimations with robust standard errors clustered at the director

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level. To unpack the differences in creativity post-jubilee in directors with different levels

of success, I also run the following DD estimation:

𝑌𝑌𝐴𝐴𝐴𝐴 = 𝛼𝛼 + 𝛽𝛽1 ∗ 𝐽𝐽𝐽𝐽𝐽𝐽𝐶𝐶𝐽𝐽𝐶𝐶𝐶𝐶𝐴𝐴𝐴𝐴 + 𝛽𝛽2 ∗ 𝜙𝜙𝐶𝐶 + 𝛿𝛿(𝐽𝐽𝐽𝐽𝐽𝐽𝐶𝐶𝐽𝐽𝐶𝐶𝐶𝐶𝐴𝐴𝐴𝐴 ∗ 𝜙𝜙𝐶𝐶) + 𝜆𝜆𝐴𝐴 + 𝛾𝛾𝐶𝐶 ∗ 𝐶𝐶 + 𝐶𝐶𝐴𝐴𝐴𝐴

In this specification, 𝜙𝜙𝐶𝐶 captures film family director or top quintile effects, and

𝛿𝛿 represents the DD parameter, the causal parameter of interest.

4.4. Results

4.4.1. Resource Structuring

To test my hypothesis regarding managers’ ability to acquire resources, I

measured resource structuring by the team size of the subsequent movies following a

successful movie. Table 16 presents some eyeball evidence for these hypotheses, and

Table 17 presents the summary statistics for the data. The eyeball evidence in Table 16

suggests that directors would be able to capitalize on their success for higher levels of

resource structuring when compared with directors who do not achieve success, but the

results of fixed effects, models and DD estimations (presented in Table 18) suggest

otherwise. While the coefficients for the main effects of jubilee and the interaction effects

remain statistically insignificant, the results connote that the team size might actually

decrease after successful performance—indicating the presence of divestiture in most

directors. There is no suggestive evidence for divestiture in the case of experienced film

family managers. Overall, I find that there isn’t much enhancement in resource structuring

in successful directors after a golden jubilee.

4.4.2. Resource Bundling

To investigate the resource bundling hypotheses, I measured resource bundling—

stabilizing, enriching, and pioneering—by using each movie’s lead actor’s level of

cumulative success in theatre-week units, i.e. the sum of the total number of weeks a lead

actors’ movies have run in theaters. If a jubilee achieving director can access lead actors

who are much more successful and experienced compared to what s/he could access

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before a jubilee, it would indicate that jubilee directors are better off in terms of resource

bundling than those directors who do not achieve this level of success. The results in

Table 19 support the notion that only a certain type of directors exhibits high levels of

resource bundling: those belonging to experienced film families (124.2, 149.4). More

specifically, after a golden jubilee, directors belonging to experienced film families in

Bollywood, are able to engage lead actors with 130 more theatre-weeks to their name

than those directors who do not belong these experienced film families.

4.4.3. Resource Leveraging

I investigated resource leveraging for two types of strategies: mass appeal focused

and quality focused. The results, presented in Tables 20 and 21, show that a golden jubilee

success only significantly affects the leveraging of resources towards mass appeal focus.

In other words, I see no differential leveraging of resources between directors who achieve

a jubilee and those who do not; moreover, I do not observe differential leveraging of

resources between directors with connections to film families and those without family

connections. In addition, I observe that jubilee directors leverage the resources toward

making movies with less mass appeal than those directors without a jubilee success (-

735.2, -812.5). Finding these results rather unusual, I further explore these dynamics in

the triple DD estimations.

4.4.4. Resource Leveraging: Results from Triple DD Estimations

In Tables 22 and 23, I present the results of triple DD estimations. These triple DD

estimations test for the differences in resource management for an additional group of

directors: those that have performed well—cumulatively—before achieving a jubilee. I

operationalize this segment of directors by an indicator variable that is ‘on’ for the top

quintile of all directors in terms of their performance. Once again, I measure performance

of directors by the cumulative number of weeks their movies have run in theatres until

achieving a jubilee hit. The results point out more detailed heterogeneity in the impact of

success on resource leveraging. More specifically, I find suggestive evidence that

directors belonging to experienced film families are engaged in leveraging their resources

for movies with less mass appeal compared to those not belonging to film families. At the

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same time, high performing directors—those in the top quintile according to

performance—disproportionately leverage resources for a mass appeal strategy (552.7,

1135): On average, the rise in the mass appeal, measured in terms of votes, is likely to be

800 more compared to rise in mass appeal leveraging for directors outside the top quintile.

Furthermore, the triple DD estimations for quality focus also point to the inherent

differences in the leveraging strategies of different types of directors. The results provide

resounding evidence that directors from experienced film families leverage their resources

disproportionately more for quality than do non-film family directors. In particular, on

average, the ratings of the movies by film family directors exhibit an increase of about 0.6

more, in a rating scale of 1-10, relative to the change in ratings of movies made by non-

film family directors (coefficients 0.488, 0.676, 0.722). This is in stark contrast to the overall

impact—negative and significant—of experiencing highly successful performance. While

overall the quality of movies goes down by about 0.5 (-0.436, 0.463, 0.476), quality focus

increases for family managers. Figure 9 summarizes these differences in resource

leveraging in a diagram.

4.5. Discussion

4.5.1. Contributions

I started this chapter with the goal of investigating how managers transform

resources to create value, particularly focusing on the resource management processes

of structuring, bundling, and leveraging. To facilitate this inquiry, I focused on the scenario

where a manager has experienced an exogenous commercial success event—potentially

leading to new opportunities for resource structuring, bundling, and leveraging. I find that,

following a successful project performance, how managers manage their resources

depends immensely on their pre-success status. With respect to resource structuring, I

am unable to find evidence that any particular group of directors had a comparative

advantage over any other group; however, there is suggestive evidence that film family

managers exhibit divestiture in terms of their team. For resource bundling, directors with

family relations have disproportionately better access to creative human capital. The most

interesting results, however, appear for resource leveraging. In contrast to the overall

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results, which indicate that quality focused leveraging decreases after a successful project

performance, film family managers leverage the available resources to improve their focus

on quality. By contrast, high performing managers are focused on the mass appeal of the

product.

Through this investigation, I make three distinct contributions to the RBT literature.

First, at a more broad level, I open the black box of resource management and how

explore how resources are leveraged for value creation. This is an area of research that

has been earmarked as deserving attention from management scholars (Lippman &

Rumelt, 2003; Priem & Butler, 2001; Sirmon et al., 2007). In particular, I am able to

causally test the impact of successful commercial performance in projects on each of the

three processes of resource management and assert that different types of directors’

resource management are differently affected by commercial success. In particular,

experience and connections of family businesses matters, as does a manager’s

performance prior to the event of the massively successful event.

The results provide some evidence that is contradicting to the large literature on

family businesses that asserts that family influence can have a negative impact on

resource acquisition through conflicts (Lester & Cannella, 2006), non-economic

motivations (Berrone & Gomez-Mejia, 2009), problems during succession (Lee, Lim, &

Lim, 2003), and poor management practices (Bloom & Van Reenen, 2007). The results of

this study point out that after experiencing exogenous shocks of good performance,

managers belonging to experienced film families do disproportionately well in terms of

enriching their resource base through bundling the current set of resources with better

creative inputs.

Second, the study provides hints at the drivers of the differences between

managers’ leveraging strategies. Film family mangers, buoyed by their embedded

connections, are able to disregard the lure to produce products of mass appeal, while

mangers without such backing are not. The managers, directors, face career risks.

Popularity from a successful project is fleeting and no one wants to be a one hit wonder.

Thus, to be remembered, one must please the masses continuously. Therefore, non-film

family managers are under pressure to do so within the next few upcoming projects. Film

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family mangers do not face this risk and are able to incline toward creative expression

rather than mass entertainment. In fact, the results corroborate that they are driven by the

family reputation and brand (Lorenzen & Anderson, 2012) to focus on quality. Therefore,

contrary to the notion that family businesses lack entrepreneurship and innovation and are

rent expropriators rather than rent creators (Mahmood & Mitchell, 2004; Morck,

Wolfenzon, & Yeung, 2005; Morck & Yeung, 2003), family managers in this thriving

creative industry are actually the ones who care about the quality of the creative product.

To the best of my knowledge, this study is the first to offer data-driven evidence for why

family production houses have been able to dominate this industry, and several other

creative industries, for almost hundred years: Their favorable position only snowballs after

commercial success with better access to lead stars and the absence of pressure to

appeal to the masses.

Last but not the least, the study contributes to our understanding of the inherent

tension in creative industries: To create products with individual artistic content or with the

potential of mass entertainment (Glynn, 2000; Lampel et al., 2000). The results point out

that which of these inherent forces dominate depends upon the reputation and status of

the managers within the industry. While film family mangers, with connections and a family

brand to live up to (Lorenzen & Täube, 2008), focus on quality in their resource leveraging,

generally well-performing managers are more concerned about maintaining their popular

status and sustaining their careers after a successful project and so continue to focus on

mass appeal in their leveraging strategy. In my follow-up interviews, one actor opined,

“They are not there yet,” talking about non film family managers not being able to

experiment and focus on quality even after achieving massive levels of box office success

as represented by golden jubilees.

In terms of policy, the results point to a unique case of creative industries, where

perhaps family-led organizations play an important role in the sector for creativity, as

opposed to other documented cases of financial tunneling and lackluster innovation

strategies (Bertrand et al., 2002; Shukla et al., 2013). Thus, policy makers looking to build

creative communities (Flew, 2012) or making policy decisions for urban spaces (Scott,

2006) should find the results useful. For practice, CEOs need to understand the

background of people in charge of resource leveraging to be able to better incentivize

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them for desirable resource leveraging strategies. In particular, the study points out that

good performance can have different impacts on resource leveraging, based upon the

type of manager in charge. Firms need to recognize these distinctions in setting strategies

and expectations from their mangers and units, as alignment of expertise and incentives

are likely to lead to better results.

4.5.2. Future Research

Like any other study, this study has several limitations that can be addressed by

future research. The chapter investigates the impact of success on resource management

by utilizing specific institutional knowledge in a film industry. I conjecture that the results

might be generalizable to some but not all industries and economies. Therefore, caution

must be exercised while drawing conclusions for other settings, which may not be

characterized by established and experienced families, and where the output may not be

a creative product produced in projects. Additionally, the setting for the data is an

emerging economy. More research in different contexts should be conducted to

strengthen the findings presented here. Furthermore, several open questions in resource

management still abound. Extensions of this study could delve deeper, and quantitatively,

into the career concerns and reputation/branding explanations behind the focus on

resource leveraging strategy of mass appeal. Additionally, to add more richness to RBT,

further research on the impact of different level of managers within the organization (Floyd

& Lane, 2000; Holcomb, Holmes Jr., & Connelly, 2009) and life cycle of firms on resource

management strategies also merit further research.

This study also has only scratched the surface of corporate governance

implications on resource management; there is a potential for future research to build on

previous work on creative industries and ownership (von Nordenflycht, 2007) by

combining the extant work with the insights presented here. While public ownership does

not diminish creativity (von Nordenflycht, 2007), the results presented here posit that

family managed and led productions focus disproportionately more on quality of creative

products than do those productions that are led by non-family managers. Still, how this

quality focus varies with tenure, successions, and the level of experience (Cabrera-

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Suárez, De Saá-Pérez, & García-Almeida, 2001; Shamsie et al., 2009) and

embeddedness (Delmestri et al., 2005) of the family business are open questions.

4.6. Conclusion

How do managers transform resources to create value? This study suggests that

family and non-family managers are affected differently in terms of resource management

following success. The study enriches RBT by empirically testing the process of resource

structuring, bundling, and leveraging of managers in a creative industry. The investigation

employed novel measurements and methods of causal empirical identification through

difference-in-differences estimations to show that there are systematic differences in

resource management strategies of managers with and without connections to established

families in creative industries. In particular, managers with family relations have much

better access to creative human capital and also exhibit resource divestiture with respect

to team size. Also, while family related managers leverage the available resources in order

to increase their focus on quality, high performing managers are focused on the mass

appeal of the product. The results provide pointers to policy makers to incentivize family

businesses for quality creative products and to practitioners to align expertise and

incentives based on the types of managers in charge of resource management. In sum,

the study makes contributions to the literature on RBT, family firms, and creative industries

and pinpoints areas for future work in these domains.

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4.7. Tables and Figures

Figure 8. Resource Management Model

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Table 15. Key variables

Variable Operationalization(s) Role in the Study

Source

Commercial Success

Indicator variable on if movie was a golden jubilee hit

Treatment Variable

Trade Guide

Resource Structuring

Size of Cast and Crew Dependent Variable, mechanism

IMDB

Resource Bundling

Theatre-Weeks of the lead actor Dependent Variable, mechanism

Trade Guide

Leveraging: Mass Appeal Focus

Number of Votes for the movie on IMDB Dependent Variable, Mechanism

IMDB

Leveraging: Quality Focus

Rating (1-10) on IMDB Dependent Variable, Mechanism

IMDB

Experienced Film Family Managers

Indicator variable if director belongs to a Film family in Bollywood Cumulative theater-weeks of director as an indicator of prior experience

Moderators Web searches—compiled through hire from Freelancer.com

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Table 16. Eyeball Evidence

Leveraging – Quality Focus

Pre Jubilee Post Jubilee Full Sample 5.74 5.95 Jubilee Directors 5.74 6.53 Leveraging – Mass Appeal Focus

Pre Jubilee Post Jubilee Full Sample 344 1038 Jubilee Directors 894 1038 Resource Structuring

Pre Jubilee Post Jubilee

Full Sample 38 65 Jubilee Directors 55 65 Resource Bundling

Pre Jubilee Post Jubilee Full Sample 138 227 Jubilee Directors 153 227

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Table 17. Summary Statistics

Variable Obs Mean Std. Dev. Min Max Resource Structuring 2424 47.06 43.67 0 519 Resource Bundling 2331 163.99 245.11 0 1114 Mass Appeal Focus 1785 581.70 2136.42 5 35375 Quality Focus 1786 5.91 1.32 1.7 8.7 Post Golden Jubilee 2426 0.15 0.36 0 1 Golden Jubilee Dummy 2426 0.03 0.16 0 1 Year of Release 2426 1990.50 9.41 1975 2014 Directors with Golden Jubilee

2426 0.20 0.40 0 1

Movie Sequence 2426 5.84 6.62 1 44 Experienced Film Family 2426 0.22 0.41 0 1 Jubilee Directors Quintiles 1108 2.99 1.43 1 5 Top Jubilee Director Quintile 2426 0.09 0.29 0 1

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Table 18. Resource Structuring

(1) (2) (3) (4) (5) (6)

VARIABLES Resource Structuring

Post Golden Jubilee Dummy 5.117 -1.676 -2.523 1.781 -3.666 -5.277 (5.115) (6.455) (6.565) (5.513) (7.346) (7.436) Experienced Film Family*Post Golden Jubilee 8.250 4.839 6.626 (10.35) (14.42) (14.80) Constant 67.98*** 4,049*** 5,629*** 67.70*** 4,055*** 5,645*** (5.339) (1,374) (1,701) (5.336) (1,373) (1,712) Observations 2,044 2,044 2,044 2,044 2,044 2,044 R-squared 0.046 0.282 0.306 0.046 0.282 0.306 Number of Directors 436 436 436 436 436 436 Director FE Yes Yes Yes Yes Yes Yes Year FE Yes Yes Yes Yes Yes Yes Director-Specific Time Trends Yes Yes Yes Yes Movie Sequence Control Yes Yes Robust standard errors in parentheses *** p<0.01, ** p<0.05, * p<0.1

The table reports the point estimates of the following specification:

𝑅𝑅𝐶𝐶𝑅𝑅𝑃𝑃𝐽𝐽𝐶𝐶𝑃𝑃𝐶𝐶 𝑆𝑆𝐶𝐶𝐶𝐶𝐽𝐽𝑃𝑃𝐶𝐶𝐽𝐽𝐶𝐶𝐶𝐶𝑛𝑛𝐵𝐵𝐴𝐴𝐴𝐴= 𝛼𝛼 + 𝛽𝛽1 ∗ 𝐽𝐽𝐽𝐽𝐽𝐽𝐶𝐶𝐽𝐽𝐶𝐶𝐶𝐶𝐴𝐴𝐴𝐴 + 𝛽𝛽2 ∗ 𝜙𝜙𝐶𝐶 + 𝛿𝛿(𝐽𝐽𝐽𝐽𝐽𝐽𝐶𝐶𝐽𝐽𝐶𝐶𝐶𝐶𝐴𝐴𝐴𝐴 ∗ 𝜙𝜙𝐶𝐶) + 𝜆𝜆𝐴𝐴 + 𝛾𝛾𝐶𝐶 + 𝛾𝛾𝐶𝐶 ∗ 𝐶𝐶 + 𝐶𝐶𝐴𝐴𝐴𝐴

Resource Structuring is measured by the number of cast and crew listed for a movie on IMDB. 𝐽𝐽𝐽𝐽𝐽𝐽𝐶𝐶𝐽𝐽𝐶𝐶𝐶𝐶𝐴𝐴𝐴𝐴 is set to 1 if the movie is released after the director achieves a golden jubilee and 0 otherwise. 𝜆𝜆𝐴𝐴 , 𝛾𝛾𝐶𝐶 ,𝐶𝐶𝑛𝑛𝑎𝑎 𝛾𝛾𝐶𝐶 ∗ 𝐶𝐶 represent time, director effects, and director-specific time trends respectively. 𝜙𝜙𝐶𝐶 captures experienced film family director effects; and, 𝛿𝛿 represents the Difference-in-Differences parameter.

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Table 19. Resource Bundling

(1) (2) (3) (4) (5) (6)

VARIABLES Resource Bundling

Post Golden Jubilee Dummy 13.92 18.04 16.45 -35.11 -36.19 -43.37 (34.47) (55.92) (49.51) (43.77) (76.15) (61.26) Experienced Film Family*Post Golden Jubilee 124.2** 137.1 149.4* (62.08) (94.41) (86.10) Constant -9.044 -4,886 7,239 -13.00 -4,321 8,260 (24.24) (3,563) (8,899) (23.86) (3,744) (8,948) Observations 1,960 1,960 1,960 1,960 1,960 1,960 R-squared 0.070 0.269 0.305 0.073 0.271 0.307 Number of Directors 433 433 433 433 433 433 Director FE Yes Yes Yes Yes Yes Yes Year FE Yes Yes Yes Yes Yes Yes Director-Specific Time Trends Yes Yes Yes Yes Movie Sequence Control Yes Yes Robust standard errors in parentheses *** p<0.01, ** p<0.05, * p<0.1 The table reports the point estimates of the following specification:

𝑅𝑅𝐶𝐶𝑅𝑅𝑃𝑃𝐽𝐽𝐶𝐶𝑃𝑃𝐶𝐶 𝐵𝐵𝐽𝐽𝑛𝑛𝑎𝑎𝐽𝐽𝐶𝐶𝑛𝑛𝐵𝐵𝐴𝐴𝐴𝐴= 𝛼𝛼 + 𝛽𝛽1 ∗ 𝐽𝐽𝐽𝐽𝐽𝐽𝐶𝐶𝐽𝐽𝐶𝐶𝐶𝐶𝐴𝐴𝐴𝐴 + 𝛽𝛽2 ∗ 𝜙𝜙𝐶𝐶 + 𝛿𝛿(𝐽𝐽𝐽𝐽𝐽𝐽𝐶𝐶𝐽𝐽𝐶𝐶𝐶𝐶𝐴𝐴𝐴𝐴 ∗ 𝜙𝜙𝐶𝐶) + 𝜆𝜆𝐴𝐴 + 𝛾𝛾𝐶𝐶 + 𝛾𝛾𝐶𝐶 ∗ 𝐶𝐶 + 𝐶𝐶𝐴𝐴𝐴𝐴

Resource Bundling is measure by the number of cumulative theatre-weeks of the lead actor of a movie. 𝐽𝐽𝐽𝐽𝐽𝐽𝐶𝐶𝐽𝐽𝐶𝐶𝐶𝐶𝐴𝐴𝐴𝐴 is set to 1 if the movie is released after the director achieves a golden jubilee and 0 otherwise. 𝜆𝜆𝐴𝐴 , 𝛾𝛾𝐶𝐶 ,𝐶𝐶𝑛𝑛𝑎𝑎 𝛾𝛾𝐶𝐶 ∗ 𝐶𝐶 represent time, director effects, and director-specific time trends respectively. 𝜙𝜙𝐶𝐶 captures experienced film family director effects; and, 𝛿𝛿 represents the Difference-in-Differences parameter.

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Table 20. Leveraging: Mass Appeal Focus

(1) (2) (3) (4) (6) (7)

VARIABLES Mass Appeal-Focus

Post Golden Jubilee Dummy -411.1 -735.2* -812.5* -178.7 -92.46 -178.9 (357.5) (406.8) (466.9) (245.7) (397.3) (390.5) Experienced Film Family*Post Golden Jubilee -573.2 -1,599 -1,555 (815.2) (999.4) (1,008) Constant 836.9 89,043** 120,634 858.5 78,067** 103,805 (546.8) (35,055) (92,122) (559.6) (32,375) (83,068) Observations 1,648 1,648 1,648 1,648 1,648 1,648 R-squared 0.063 0.334 0.349 0.064 0.339 0.354 Number of Directors 364 364 364 364 364 364 Director FE Yes Yes Yes Yes Yes Yes Year FE Yes Yes Yes Yes Yes Yes Director-Specific Time Trends Yes Yes Yes Yes Movie Sequence Control Yes Yes Robust standard errors in parentheses *** p<0.01, ** p<0.05, * p<0.1

The table reports the point estimates of the following specification:

𝑀𝑀𝐶𝐶𝑅𝑅𝑅𝑅 𝐴𝐴𝑃𝑃𝑃𝑃𝐶𝐶𝐶𝐶𝐽𝐽 𝐹𝐹𝑃𝑃𝑃𝑃𝐽𝐽𝑅𝑅𝐴𝐴𝐴𝐴= 𝛼𝛼 + 𝛽𝛽1 ∗ 𝐽𝐽𝐽𝐽𝐽𝐽𝐶𝐶𝐽𝐽𝐶𝐶𝐶𝐶𝐴𝐴𝐴𝐴 + 𝛽𝛽2 ∗ 𝜙𝜙𝐶𝐶 + 𝛿𝛿(𝐽𝐽𝐽𝐽𝐽𝐽𝐶𝐶𝐽𝐽𝐶𝐶𝐶𝐶𝐴𝐴𝐴𝐴 ∗ 𝜙𝜙𝐶𝐶) + 𝜆𝜆𝐴𝐴 + 𝛾𝛾𝐶𝐶 + 𝛾𝛾𝐶𝐶 ∗ 𝐶𝐶 + 𝐶𝐶𝐴𝐴𝐴𝐴

Mass Appeal focus for movies, as a resource leveraging strategy, is measured by the number of votes for a movie on IMDB. 𝐽𝐽𝐽𝐽𝐽𝐽𝐶𝐶𝐽𝐽𝐶𝐶𝐶𝐶𝐴𝐴𝐴𝐴 is set to 1 if the movie is released after the director achieves a golden jubilee and 0 otherwise. 𝜆𝜆𝐴𝐴 , 𝛾𝛾𝐶𝐶 ,𝐶𝐶𝑛𝑛𝑎𝑎 𝛾𝛾𝐶𝐶 ∗ 𝐶𝐶 represent time, director effects, and director-specific time trends respectively. 𝜙𝜙𝐶𝐶 captures experienced film family director effects; and, 𝛿𝛿 represents the Difference-in-Differences parameter.

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Table 21. Leveraging: Quality Focus

(1) (2) (3) (4) (5) (6)

VARIABLES Quality-Focus

Post Golden Jubilee Dummy -0.118 -0.0963 -0.0787 -0.156 -0.250 -0.262 (0.129) (0.140) (0.153) (0.164) (0.191) (0.201) Experienced Film Family*Post Golden Jubilee 0.0930 0.383 0.451 (0.243) (0.307) (0.328) Constant 6.925*** 177.0*** 199.2*** 6.922*** 179.6*** 204.1*** (0.177) (26.60) (30.20) (0.177) (26.13) (31.07) Observations 1,649 1,649 1,649 1,649 1,649 1,649 R-squared 0.238 0.446 0.468 0.238 0.447 0.469 Number of Directors 364 364 364 364 364 364 Director FE Yes Yes Yes Yes Yes Yes Year FE Yes Yes Yes Yes Yes Yes Director-Specific Time Trends Yes Yes Yes Yes Movie Sequence Control Yes Yes Robust standard errors in parentheses *** p<0.01, ** p<0.05, * p<0.1

The table reports the point estimates of the following specification:

𝑄𝑄𝐽𝐽𝐶𝐶𝐽𝐽𝐶𝐶𝐶𝐶𝑦𝑦 𝐹𝐹𝑃𝑃𝑃𝑃𝐽𝐽𝑅𝑅𝐴𝐴𝐴𝐴= 𝛼𝛼 + 𝛽𝛽1 ∗ 𝐽𝐽𝐽𝐽𝐽𝐽𝐶𝐶𝐽𝐽𝐶𝐶𝐶𝐶𝐴𝐴𝐴𝐴 + 𝛽𝛽2 ∗ 𝜙𝜙𝐶𝐶 + 𝛿𝛿(𝐽𝐽𝐽𝐽𝐽𝐽𝐶𝐶𝐽𝐽𝐶𝐶𝐶𝐶𝐴𝐴𝐴𝐴 ∗ 𝜙𝜙𝐶𝐶) + 𝜆𝜆𝐴𝐴 + 𝛾𝛾𝐶𝐶 + 𝛾𝛾𝐶𝐶 ∗ 𝐶𝐶 + 𝐶𝐶𝐴𝐴𝐴𝐴

Quality focus, as a resource leveraging strategy, is captured by the IMDB rating for a movie. 𝐽𝐽𝐽𝐽𝐽𝐽𝐶𝐶𝐽𝐽𝐶𝐶𝐶𝐶𝐴𝐴𝐴𝐴 is set to 1 if the movie is released after the director achieves a golden jubilee and 0 otherwise. 𝜆𝜆𝐴𝐴 , 𝛾𝛾𝐶𝐶 ,𝐶𝐶𝑛𝑛𝑎𝑎 𝛾𝛾𝐶𝐶 ∗ 𝐶𝐶 represent time, director effects, and director-specific time trends respectively. 𝜙𝜙𝐶𝐶 captures experienced film family director effects; and, 𝛿𝛿 represents the Difference-in-Differences parameter.

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Table 22. Mass Appeal Focus: Triple DD Analyses

(1) (2) (3) VARIABLES Mass Appeal-Focus Post Golden Jubilee -309.9 -145.9 -363.3 (235.3) (401.6) (465.6) Experienced Film Family*Post Golden Jubilee -844.3 -1,008 -876.7 (744.3) (883.8) (883.2) High Performing Director -249.8 -564.6** -783.7 (245.4) (241.7) (476.3) High Performing Director* Experienced Film Family 203.5 551.5* 745.0 (176.3) (316.2) (453.2) High Performing Director*Jub 552.7* 643.2 1,135* (283.1) (401.9) (610.7) EFF*HPD*Jub 208.7 -2,086 -2,455 (826.3) (1,563) (1,591) Constant 891.5 67,200** 102,113 (546.5) (30,759) (78,863) Observations 1,648 1,648 1,648 R-squared 0.067 0.344 0.358 Number of Directors 364 364 364 Director FE Yes Yes Yes Year FE Yes Yes Yes Director-Specific Time Trends Yes Yes Movie Sequence Control Yes Robust standard errors in parentheses *** p<0.01, ** p<0.05, * p<0.1

Notes: This figure plots point estimates for a triple DD regression of the following specification:

𝑀𝑀𝐶𝐶𝑅𝑅𝑅𝑅 𝐴𝐴𝑃𝑃𝑃𝑃𝐶𝐶𝐶𝐶𝐽𝐽 𝐹𝐹𝑃𝑃𝑃𝑃𝐽𝐽𝑅𝑅𝐴𝐴𝐴𝐴= 𝛼𝛼 + 𝛽𝛽1 ∗ 𝑇𝑇𝑃𝑃𝑃𝑃 𝑄𝑄𝐽𝐽𝐶𝐶𝑛𝑛𝐶𝐶𝐶𝐶𝐽𝐽𝐶𝐶 + 𝛽𝛽2 ∗ 𝐹𝐹𝐶𝐶𝐽𝐽𝑃𝑃 𝐹𝐹𝐶𝐶𝑃𝑃𝐶𝐶𝐽𝐽𝑦𝑦 + 𝛽𝛽3∗ (𝑇𝑇𝑃𝑃𝑃𝑃 𝑄𝑄𝐽𝐽𝐶𝐶𝑛𝑛𝐶𝐶𝐶𝐶𝐽𝐽𝐶𝐶 ∗ 𝐹𝐹𝐶𝐶𝐽𝐽𝑃𝑃 𝐹𝐹𝐶𝐶𝑃𝑃𝐶𝐶𝐽𝐽𝑦𝑦) + 𝜃𝜃0 ∗ 𝑃𝑃𝑃𝑃𝑅𝑅𝐶𝐶𝐽𝐽𝐽𝐽𝐽𝐽𝐶𝐶𝐽𝐽𝐶𝐶𝐶𝐶𝐴𝐴𝐴𝐴+ 𝜃𝜃1(𝐽𝐽𝐽𝐽𝐽𝐽𝐶𝐶𝐽𝐽𝐶𝐶𝐶𝐶𝐴𝐴𝐴𝐴 ∗ 𝑇𝑇𝑃𝑃𝑃𝑃 𝑄𝑄𝐽𝐽𝐶𝐶𝑛𝑛𝐶𝐶𝐶𝐶𝐽𝐽𝐶𝐶) + 𝜃𝜃2(𝑃𝑃𝑃𝑃𝑅𝑅𝐶𝐶 𝐽𝐽𝐽𝐽𝐽𝐽𝐶𝐶𝐽𝐽𝐶𝐶𝐶𝐶 ∗ 𝐹𝐹𝐶𝐶𝐽𝐽𝑃𝑃 𝐹𝐹𝐶𝐶𝑃𝑃𝐶𝐶𝐽𝐽𝐶𝐶𝑦𝑦)+ 𝛿𝛿(𝑃𝑃𝑃𝑃𝑅𝑅𝐶𝐶 𝐽𝐽𝐽𝐽𝐽𝐽𝐶𝐶𝐽𝐽𝐶𝐶𝐶𝐶 ∗ 𝐹𝐹𝐶𝐶𝐽𝐽𝑃𝑃 𝐹𝐹𝐶𝐶𝑃𝑃𝐶𝐶𝐽𝐽𝑦𝑦 ∗ 𝑇𝑇𝑃𝑃𝑃𝑃 𝑄𝑄𝐽𝐽𝐶𝐶𝑛𝑛𝐶𝐶𝐶𝐶𝐽𝐽𝐶𝐶) + 𝜆𝜆𝐴𝐴 + 𝛾𝛾𝐶𝐶 + 𝛾𝛾𝐶𝐶 ∗ 𝐶𝐶 + 𝐶𝐶𝐴𝐴𝐴𝐴

𝐽𝐽𝐽𝐽𝐽𝐽𝐶𝐶𝐽𝐽𝐶𝐶𝐶𝐶𝐴𝐴𝐴𝐴 is set to 1 if the movie is released after the director achieves a golden jubilee and 0 otherwise. 𝜆𝜆𝐴𝐴 , 𝛾𝛾𝐶𝐶 ,𝐶𝐶𝑛𝑛𝑎𝑎 𝛾𝛾𝐶𝐶 ∗ 𝐶𝐶 represent time and director effects and director-specific time trends respectively. 𝛿𝛿 represents the triple Difference-in-Differences parameter.

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Table 23. Quality Focus: Triple DD Analyses

(1) (2) (3) VARIABLES Quality-Focus Post Golden Jubilee -0.436*** -0.463* -0.476* (0.163) (0.240) (0.246) Experienced Film Family*Post Golden Jubilee 0.488* 0.676** 0.722** (0.258) (0.334) (0.344) High Performing Director -0.0150 0.105 0.0759 (0.411) (0.409) (0.421) High Performing Director* Experienced Film Family -0.165 -0.0282 0.00844 (0.419) (0.485) (0.563) High Performing Director*Jub 0.586 0.350 0.408 (0.482) (0.505) (0.515) EFF*HPD*Jub -0.598 -0.645 -0.667 (0.563) (0.646) (0.715) Constant 6.917*** 174.8*** 193.6*** (0.177) (26.40) (32.90) Observations 1,649 1,649 1,649 R-squared 0.242 0.448 0.470 Number of Directors 364 364 364 Director FE Yes Yes Yes Year FE Yes Yes Yes Director-Specific Time Trends Yes Yes Movie Sequence Control Yes Robust standard errors in parentheses *** p<0.01, ** p<0.05, * p<0.1

Notes: This figure plots point estimates for a triple DD regression of the following specification:

𝑄𝑄𝐽𝐽𝐶𝐶𝐽𝐽𝐶𝐶𝐶𝐶𝑦𝑦 𝐹𝐹𝑃𝑃𝑃𝑃𝐽𝐽𝑅𝑅/ 𝑀𝑀𝐶𝐶𝑅𝑅𝑅𝑅 𝐴𝐴𝑃𝑃𝑃𝑃𝐶𝐶𝐶𝐶𝐽𝐽 𝐹𝐹𝑃𝑃𝑃𝑃𝐽𝐽𝑅𝑅𝐴𝐴𝐴𝐴= 𝛼𝛼 + 𝛽𝛽1 ∗ 𝑇𝑇𝑃𝑃𝑃𝑃 𝑄𝑄𝐽𝐽𝐶𝐶𝑛𝑛𝐶𝐶𝐶𝐶𝐽𝐽𝐶𝐶 + 𝛽𝛽2 ∗ 𝐹𝐹𝐶𝐶𝐽𝐽𝑃𝑃 𝐹𝐹𝐶𝐶𝑃𝑃𝐶𝐶𝐽𝐽𝑦𝑦 + 𝛽𝛽3∗ (𝑇𝑇𝑃𝑃𝑃𝑃 𝑄𝑄𝐽𝐽𝐶𝐶𝑛𝑛𝐶𝐶𝐶𝐶𝐽𝐽𝐶𝐶 ∗ 𝐹𝐹𝐶𝐶𝐽𝐽𝑃𝑃 𝐹𝐹𝐶𝐶𝑃𝑃𝐶𝐶𝐽𝐽𝑦𝑦) + 𝜃𝜃0 ∗ 𝑃𝑃𝑃𝑃𝑅𝑅𝐶𝐶𝐽𝐽𝐽𝐽𝐽𝐽𝐶𝐶𝐽𝐽𝐶𝐶𝐶𝐶𝐴𝐴𝐴𝐴+ 𝜃𝜃1(𝐽𝐽𝐽𝐽𝐽𝐽𝐶𝐶𝐽𝐽𝐶𝐶𝐶𝐶𝐴𝐴𝐴𝐴 ∗ 𝑇𝑇𝑃𝑃𝑃𝑃 𝑄𝑄𝐽𝐽𝐶𝐶𝑛𝑛𝐶𝐶𝐶𝐶𝐽𝐽𝐶𝐶) + 𝜃𝜃2(𝑃𝑃𝑃𝑃𝑅𝑅𝐶𝐶 𝐽𝐽𝐽𝐽𝐽𝐽𝐶𝐶𝐽𝐽𝐶𝐶𝐶𝐶 ∗ 𝐹𝐹𝐶𝐶𝐽𝐽𝑃𝑃 𝐹𝐹𝐶𝐶𝑃𝑃𝐶𝐶𝐽𝐽𝐶𝐶𝑦𝑦)+ 𝛿𝛿(𝑃𝑃𝑃𝑃𝑅𝑅𝐶𝐶 𝐽𝐽𝐽𝐽𝐽𝐽𝐶𝐶𝐽𝐽𝐶𝐶𝐶𝐶 ∗ 𝐹𝐹𝐶𝐶𝐽𝐽𝑃𝑃 𝐹𝐹𝐶𝐶𝑃𝑃𝐶𝐶𝐽𝐽𝑦𝑦 ∗ 𝑇𝑇𝑃𝑃𝑃𝑃 𝑄𝑄𝐽𝐽𝐶𝐶𝑛𝑛𝐶𝐶𝐶𝐶𝐽𝐽𝐶𝐶) + 𝜆𝜆𝐴𝐴 + 𝛾𝛾𝐶𝐶 + 𝛾𝛾𝐶𝐶 ∗ 𝐶𝐶 + 𝐶𝐶𝐴𝐴𝐴𝐴

𝐽𝐽𝐽𝐽𝐽𝐽𝐶𝐶𝐽𝐽𝐶𝐶𝐶𝐶𝐴𝐴𝐴𝐴 is set to 1 if the movie is released after the director achieves a golden jubilee and 0 otherwise. 𝜆𝜆𝐴𝐴 , 𝛾𝛾𝐶𝐶 ,𝐶𝐶𝑛𝑛𝑎𝑎 𝛾𝛾𝐶𝐶 ∗ 𝐶𝐶 represent time and director effects and director-specific time trends respectively. 𝛿𝛿 represents the triple Difference-in-Differences parameter.

95

Figure 9. Mass Appeal vs. Quality Focus – Summary

Notes: This figure plots point estimates for a triple DD regression of the following specification:

𝑄𝑄𝐽𝐽𝐶𝐶𝐽𝐽𝐶𝐶𝐶𝐶𝑦𝑦 𝐹𝐹𝑃𝑃𝑃𝑃𝐽𝐽𝑅𝑅/ 𝑀𝑀𝐶𝐶𝑅𝑅𝑅𝑅 𝐴𝐴𝑃𝑃𝑃𝑃𝐶𝐶𝐶𝐶𝐽𝐽 𝐹𝐹𝑃𝑃𝑃𝑃𝐽𝐽𝑅𝑅𝐴𝐴𝐴𝐴= 𝛼𝛼 + 𝛽𝛽1 ∗ 𝑇𝑇𝑃𝑃𝑃𝑃 𝑄𝑄𝐽𝐽𝐶𝐶𝑛𝑛𝐶𝐶𝐶𝐶𝐽𝐽𝐶𝐶 + 𝛽𝛽2 ∗ 𝐹𝐹𝐶𝐶𝐽𝐽𝑃𝑃 𝐹𝐹𝐶𝐶𝑃𝑃𝐶𝐶𝐽𝐽𝑦𝑦 + 𝛽𝛽3 ∗ (𝑇𝑇𝑃𝑃𝑃𝑃 𝑄𝑄𝐽𝐽𝐶𝐶𝑛𝑛𝐶𝐶𝐶𝐶𝐽𝐽𝐶𝐶 ∗ 𝐹𝐹𝐶𝐶𝐽𝐽𝑃𝑃 𝐹𝐹𝐶𝐶𝑃𝑃𝐶𝐶𝐽𝐽𝑦𝑦)+ 𝜃𝜃0 ∗ 𝑃𝑃𝑃𝑃𝑅𝑅𝐶𝐶𝐽𝐽𝐽𝐽𝐽𝐽𝐶𝐶𝐽𝐽𝐶𝐶𝐶𝐶𝐴𝐴𝐴𝐴 + 𝜃𝜃1(𝐽𝐽𝐽𝐽𝐽𝐽𝐶𝐶𝐽𝐽𝐶𝐶𝐶𝐶𝐴𝐴𝐴𝐴 ∗ 𝑇𝑇𝑃𝑃𝑃𝑃 𝑄𝑄𝐽𝐽𝐶𝐶𝑛𝑛𝐶𝐶𝐶𝐶𝐽𝐽𝐶𝐶)+ 𝜃𝜃2(𝑃𝑃𝑃𝑃𝑅𝑅𝐶𝐶 𝐽𝐽𝐽𝐽𝐽𝐽𝐶𝐶𝐽𝐽𝐶𝐶𝐶𝐶 ∗ 𝐹𝐹𝐶𝐶𝐽𝐽𝑃𝑃 𝐹𝐹𝐶𝐶𝑃𝑃𝐶𝐶𝐽𝐽𝐶𝐶𝑦𝑦) + 𝛿𝛿(𝑃𝑃𝑃𝑃𝑅𝑅𝐶𝐶 𝐽𝐽𝐽𝐽𝐽𝐽𝐶𝐶𝐽𝐽𝐶𝐶𝐶𝐶 ∗ 𝐹𝐹𝐶𝐶𝐽𝐽𝑃𝑃 𝐹𝐹𝐶𝐶𝑃𝑃𝐶𝐶𝐽𝐽𝑦𝑦 ∗ 𝑇𝑇𝑃𝑃𝑃𝑃 𝑄𝑄𝐽𝐽𝐶𝐶𝑛𝑛𝐶𝐶𝐶𝐶𝐽𝐽𝐶𝐶)+ 𝜆𝜆𝐴𝐴 + 𝛾𝛾𝐶𝐶 + 𝛾𝛾𝐶𝐶 ∗ 𝐶𝐶 + 𝐶𝐶𝐴𝐴𝐴𝐴

𝐽𝐽𝐽𝐽𝐽𝐽𝐶𝐶𝐽𝐽𝐶𝐶𝐶𝐶𝐴𝐴𝐴𝐴 is set to 1 if the movie is released after the director achieves a golden jubilee and 0 otherwise. 𝜆𝜆𝐴𝐴 , 𝛾𝛾𝐶𝐶 ,𝐶𝐶𝑛𝑛𝑎𝑎 𝛾𝛾𝐶𝐶 ∗ 𝐶𝐶 represent time and director effects and director-specific time trends respectively. 𝛿𝛿 represents the triple Difference-in-Differences parameter.

96

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